“The transmission network in India, we believe, is going to expand substantially first on account of the general load growth, and second due to India’s efforts towards energy transition. So we believe that there is going to be a substantial amount of capex and we will have a reasonable amount of business out of that.”
– Mr. Harsh Shah, CEO & Whole – Time Director (In Q3FY23 Concall)
| Stock Data | |
| Ticker | 540565 |
| Exchange | BSE |
| Industry | POWER TRANSMISSION |
| Price Performance | |
| Last 5 Days | +3.19% |
| YTD | -4.97% |
| Last 12 Months | -9.46% |
*As of 27.03.2023
Company Description:
India Grid Trust (IndiGrid) is an infrastructure investment trust (InvIT) that was established in 2016. The company is registered with the Securities and Exchange Board of India (SEBI) and is one of the leading InvITs in India. The company primarily invests in power transmission assets and has a portfolio of several power transmission projects.
India’s electricity sector has seen significant growth in recent years. The country has the fifth-largest electricity generation capacity in the world, with a total installed capacity of 384.31 GW as of March 2021. However, the transmission and distribution infrastructure in the country has not kept pace with the growth in generation capacity. This has led to transmission bottlenecks, which have resulted in high transmission losses and reduced reliability of power supply. To address this issue, the Indian government has undertaken several initiatives to strengthen the transmission infrastructure in the country. As a result, the transmission sector has emerged as an attractive investment opportunity in India.
Key Strengths:
India Grid Trust (IndiGrid) is a unique company in India’s infrastructure sector for several reasons:
- InvIT Structure: IndiGrid is an infrastructure investment trust (InvIT) that was established in 2016. InvITs are a relatively new investment vehicle in India that allows investors to invest in infrastructure assets that generate stable cash flows. IndiGrid was the first InvIT to be launched in India that invests in power transmission assets. This innovative structure allows investors to participate in India’s infrastructure growth story and benefit from stable long-term returns. India Grid provides consistent and growing Distribution per Unit (DPU) to its investors.
- Focus on Power Transmission: IndiGrid’s primary focus is on power transmission assets, which are critical infrastructure that form an integral part of the country’s power transmission network. The company has a portfolio of several power transmission projects that include a network of 42 power transmission lines and 12 substations spanning across 19 states & 1 UT in India. The transmission assets have a total transmission capacity of 7,790 circuit kilometers and a transformation capacity of 14,550 megavolt-amperes. IndiGrid’s transmission assets are essential infrastructure that plays a crucial role in delivering reliable power supply across the country.
- Long-Term Contracts: IndiGrid’s transmission assets have long-term contracts with the central transmission utility, Power Grid Corporation of India Limited (PGCIL). These contracts provide stable, predictable cash flows that enable the company to deliver consistent returns to its investors.
- Diversification into Renewable Energy: IndiGrid has recently announced its intention to diversify into the renewable energy sector, which is a significant growth opportunity for the company. The company plans to acquire renewable energy assets that are complementary to its existing transmission assets and leverage its expertise in the power transmission sector to create a unique value proposition for its investors.
Overall, India Grid Trust is a unique company that has a focus on critical infrastructure, a stable revenue model, and strong financial performance. The company’s innovative InvIT structure and focus on power transmission assets make it a compelling investment opportunity for investors looking for stable long-term returns.
Key Opportunities:
The company has a strong track record of performance and is well-positioned to take advantage of several opportunities in the market. Some of the opportunities for IndiGrid include:
- Infrastructure Investment: India is expected to invest heavily in infrastructure over the next decade, particularly in the power transmission and renewable energy sectors. The Indian government has set ambitious targets for the renewable energy sector, with a target of achieving 500 GW of renewable energy capacity. IndiGrid can benefit from this investment by acquiring additional transmission and renewable energy assets.
- Transmission Network Expansion: India is undertaking a significant expansion of its power transmission network, with plans to add over 100,000 circuit kilometers of transmission lines over the next decade. This expansion will provide IndiGrid with opportunities to acquire additional transmission assets that are critical to the country’s power transmission network.
- Renewable Energy Growth: India is one of the fastest-growing renewable energy markets in the world, and the sector is expected to grow at a compound annual growth rate (CAGR) of 18% over the next decade. IndiGrid’s recent announcement to diversify into the renewable energy sector will enable the company to take advantage of this growth opportunity.
- Consolidation in the Sector: The Indian infrastructure sector is highly fragmented, with many small players operating in the market. There is a trend towards consolidation in the sector, with larger players acquiring smaller players to create economies of scale and improve their operational efficiency. IndiGrid, with its strong financial performance and access to capital, is well-positioned to acquire smaller players in the market.
- Policy Support: The Indian government is supportive of the infrastructure sector and has introduced several policy initiatives to encourage investment in the sector. For instance, the government has introduced tax incentives for infrastructure investment trusts (InvITs) like India Grid, which can help the company attract more investors and grow its asset portfolio.
To sum up, India’s power transmission sector is expected to witness strong growth in the coming years, driven by the increasing demand for electricity, the growth in renewable energy, and the need to strengthen the transmission infrastructure in the country. IndiGrid is well-positioned to benefit from this growth, given its portfolio of critical transmission assets, long-term contracts with PGCIL, and experienced management team. The company has also recently announced its intention to diversify into the renewable energy sector, which is a significant growth opportunity for the company.