India Grid Trust Q3 FY23 Earnings Conference Call Insights

Key highlights from India Grid Trust (INDIGRID) Q3 FY23 Earnings Concall

Management Update:

• [00:06:17] INDIGRID said that it expects transmission network in India to expand substantially due to the general load growth and the country’s efforts towards energy transition.

• [00:08:12] On reliability, INDIGRID said it achieved 0.08 trips per-line in 3Q23, which was a record quarter and best in industry at peer comparison level.

Q&A Highlights:

• [00:25:28] Mohit Kumar from DAM Capital enquired about the framework agreement and if the projects have been identified and its timelines. Harsh Shah CEO said that INDIGRID has identified the projects, and the bid pipelines are too specific and are the ones that’s already announced.

• [00:26:00] Mohit Kumar with DAM Capital also asked about the leverage post all the transactions, mainly post KTL and how capital will be raised in FY24. Meghana Pandit CIO replied that currently INDIGRID is at 58% after Raichur. Post acquiring Khargone transmission, it will get close to about 61%. And post-acquisition, depending on the size of acquisition, it will add to the debt and bottom line.

• [00:28:58] Rahul Marathe of ICICI Prudential queried about the MoU signed with GR Infra and if INDIGRID will be exposed to some greenfield risk. Harsh Shah CEO answered that the MOUs allows INDIGRID to explore different options when it comes to projects. In certain cases, where there is more synergy and value for INDIGRID, it may decide to take on construction risk.

• [00:30:49] Pratik Kothari at Unique Portfolio Managers asked about the MoU risks that one needs to be aware of. Harsh Shah CEO replied that the MOU itself does not pose any risk to the company. However, if the company looks to do different type of arrangements for bids, then there might be a risk involved. This will depend on various parameters, and the risk is not present as of now.

• [00:36:09] Chandramouli M asked if the distribution per unit will increase consequent to the NDCF going up 8-9% adding about INR85 crore on new acquisition.  Harsh Shah CEO replied that INDIGRID have historically taken a decision in 4Q of the Board Meeting for the next annual year to increase distribution if it can be done consistently and remain stable for the next 5 to 6 years. Whether this is done this quarter or not depends on the Board’s decision, which will be taken up in 1Q24 meeting.

• [00:51:48] Rajan Patadia asked about the cost of interest for the INR1,500 crore acquisition, INDIGRID is acquiring at 8.5% ROI. Harsh Shah CEO answered that the company will have good amount of spread between the cost of debt and the rate of discounting at which INDIGRID has purchased. Therefore, the impact is minimal.

• [00:54:43] Rajan Patadia also enquired about the borrowing capacity left after the acquisitions. Harsh Shah CEO replied that anywhere between INR2,000-3,000 crores is what the company reckons, which is sizable.