Powergrid Infrastructure Investment Trust (NSE: PGINVIT) Q4 2025 Earnings Call dated May. 26, 2025
Corporate Participants:
Naveen Srivastava — Chairman
Unidentified Speaker
Analysts:
Nidhi Shah — Analyst
Mahesh Patil — Analyst
Ankit Minocha — Analyst
Aniket Nikumb — Analyst
Dhiraj Dave — Analyst
Sarvesh Gupta — Analyst
Jay Kumthekar — Analyst
Nilesh Doshi — Analyst
Gopal — Analyst
Bharat Gupta — Analyst
Nilesh Doshi — Analyst
Presentation:
Operator
Good day and ladies and gentlemen, good day, and welcome to the Q4 and FY ’25 Earnings Conference Call of Power Grid Infrastructure Investment Trust Limited hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Nidi Shah from ICICI Securities. Thank you, and over to you, ma’am.
Nidhi Shah — Analyst
Thank you, Puja. Good morning or good evening. On behalf of ICICI Securities, I invite you all to the Q4 FY ’22 earnings call of Investor. Yes, please just Naveen also Chairman hello.
Operator
Yes, ma’am, go-ahead.
Nidhi Shah — Analyst
Yeah you. Are you able to hear me?
Operator
Yes, ma’am, I’m able to hear you now. Yeah,
Nidhi Shah — Analyst
Okay yes so just to repeat again from the management we have Mister Naveen who is the Chairman? MR. Sanjesh, the Director; Mr Amit Garg, Director; Ms Dath, Chief Executive Officer; Mr Gaurav Malik, Chief Financial Officer; and Mr Shwetan Kumar, Company Secretary and Compliance Officer. We will start the call with brief opening remarks by the management, which will be followed by the Q&A. Over to you, sir and ma’am.
Naveen Srivastava — Chairman
Good afternoon. Good afternoon, everyone. On behalf of Ujaha Transmission Limited, the Investment Manager to PG, I extend a warm welcome and sincere appreciation to all the participants for joining this call. Today, I am joined by Mr Sanjay Sharma, Director of; Shri Amit Garth, Director of; Ms, CEO of; Mr Gaurav Malik, CFO of PUTL; Mr Kumar, company secretary and compliance officers along with other senior officials. Further, I also wish to inform that Dr Anupam Arouda has joined as Independent Director of PUTL with effect from May 19, 2025. Earlier today, on May 26, 2025 Powergate Infrastructure Investment Trust, PG InvIT announced its financial results for the quarter and financial year ended, 31, 2025, along with distribution details for Q4 FY 2024-’25. These documents are available on the website of BSE, NSE and PG InvIT. A detailed investor presentation covering the Q4 FY ’25 and full-year FY ’25 financial performance has been uploaded to our website. In the interest of time, I will now share a brief overview. PG InvIT’s investor base has grown steadily from approximately 15,000 unit holders at the time of IPO to over 1.89 lakhs unitholders as of, 31 March 2025. We sincerely thank our investors for their continued trust and support. Let me begin with a brief introduction of the trust to our new investors. PG InvIT is an infrastructure investment trust with Corporation of India Limited and Maharatna Central Public Sector Enterprises and India’s largest power transmission utility, acting as its sponsor and project manager. Powergate Ujha Transmission Limited, a wholly-owned subsidiary of Powergate serves as Investment Manager while IDBI Ship Services Limited is the. PG currently owns five SPV special-purpose vehicles namely VTL AATL EPTL WTL and JBTL it holds 100% equity in all the five SPVs these SPVs operate 11 transmission lines covering almost 3,699 circuit kilometers and three substations with a combined transformation capacity of 6,630 MBA. All are fully operational revenue-generating assets governed by a long-term transmission service agreements TSA with an average remaining life exceeding 27 years. These interstate transmission system, ISCS assets implemented under tariff-based competitive building framework on a build, own, operate and maintain basis have a 35-year contract annual. This minimizes regulatory risk-on tariffs and ensures long-term revenue visibility. Backed by India’s largest transmission utility as both sponsors and project manager, PG InvIT benefits from operational strength, consistent asset availability and high-reliability and safety standards. With availability-based fixed tariff transmission service, agreements and low leverage levels, ensures predictable cash flows while maintaining flexibility for depth-funded acquisitions to support future growth. These trends position PG to create sustainable value to its unitholders. Our objective remain clear to deliver consistent, stable and predictable returns to our investors.
Distribution, let me now move to the distribution for Q4 FY ’25. Earlier today on, 26, 2025, a distribution of INR3 per unit was declared for the quarter-ending March 31, 2025. This marks the Trust’s fourth distribution for FY ’24-’25 and the 15th consecutive quarterly distribution since listing. Unit holders will receive this distribution on or before June 5, 2025. With this latest declaration, PG Inmit has distributed a cumulative INR46.50 per unit since its IPO, which was issued at INR100 per unit, amounting to total distribution of over 42.31 billion. This quarter-four distribution brings the total payout for financial year 2024 ’25 to INR12 per unit in-line with the guidance provided in the earning call for Q4 FY 2024. We remain committed to maintaining this momentum and aim to deliver a INR12 per unit distribution for FY ’25-’26 as well. Our quarterly distribution are guided by PG InvIT’s distribution policy and in compliance with CB regulations, which mandate the distribution of at least 90% of NDCF net distributable cash flows to unit holders. In accordance with this policy, distributions are declared and paid not less than once every quarter. Now I’ll come to the highlights for the quarter and financial year ended, 31, 2025. Operations, leveraging cutting-edge technologies and maintaining a strong focus on safety. Our project manager has ensured the efficient and excellent free operations of PG transmission assets throughout the quarter. The average availability across each SPV exceeded the stipulated targets, reflecting their strong operational performance and reliability. Based on provisional data, the average ability of FY ’25 was over 98% across all SPVs. Please note that these figures are provisional pending the receipt of monthly availability certificates from regional power committees under Ministry of Power Government of India for the period January to March 2025 as many of you may be aware, one of our SPV PPTL is currently undertaking a project under regulated tariff mechanism. This project titled implementation of 400 KV line base at 765 by 400 KV per link substations for our integration.
This was awarded by CTYL with a completion schedule by December 2025. The project has been granted a transmission licensee by CRC. Award has already been placed and for the execution of the project and it’s progressing well, I’m pleased to share that there were no accident reported during whole financial year 2024, ’25. On the CSR front, corporate social responsibility front, PG InvIT has provided medical equipment to 14 primary health centers across multiple state. The total CSR expenditure across our five SUVs amounting to about INR6.75 crores. We are proud to have achieved 100% compliance with CSR obligations under the Company’s Act once again this year, continuing our consistent track-record. Now I’ll come to the financial highlights. For the Q4 FY ’24-’25, PG InvIT reported a total consolidated income of approximately INR3,201.35 million. This includes INR3,113.26 million from revenue from operations and INR88.09 million from other incomes, primarily comprising interest incomes from deposits. Total consolidated expenses for the quarter, excluding impairment charges stood at around INR1,247.50 million. For the full financial year FY ’24-’25, the total consolidated income also stood at INR13,050.55 million with operational revenue of INR12,664.93 million and other income of INR385.62 million. Consolidated expenses, excluding impairment remained at INR4,608.58 million. Profit-after-tax for FY ’24-’25 has increased to INR11,718.93 million as against INR9,817.232 million in financial year ’23-’24. Earning per unit has also increased to 12.92 in financial year ’24-’25 from INR10.18 in financial year ’23-’24.
Total assets are also increased to INR1,1872.35 million in financial year ’24 ’25 from INR99,826.37 million in financial year ’23-’24. Fair-value NAV per unit also increased to 94.12 in financial year ’24-’25 from INR85.28 million in 85.28 in financial year ’23 ’24. The NDCF — NDCF calculated at SVB level has also has been included in the consolidated financial results. The Trust received cash inflow from SVBs in the form of interest income, dividends and debt repayments, in-line with CB regulations and PG InvIT distribution policy, over 90% of the NDCF generated at the SPV level was upstreamed to the Trust by, 31 March 2025. PG NDCF for the quarter ended March 31 March 2025 stood at INR2,858.65 million, NDCF for the full financial year FY ’24-’25 stands at INR10,810.15 million. The declared distribution of INR3 per unit for Q4 FY ’25 comprises of following components. Interest income is INR1.67 per unit. Taxable dividend is INR0.48 per unit. Exempt dividend is INR0.09 per unit, SPV debt repayment is INR0.75 per unit and treasury income is INR0.01 per unit. The total distribution exceeded the regulatory requirement of distributing at least 90% of the NDCF at the trust level, reaffirming PG commitment to its distribution policy and regulatory compliances.
As of, 31, 2025, PG outstanding external borrowing stood at INR10,723.19 million, which includes an outstanding loan of I669, INR5,6069.51 million loan secured from HDFC Bank in March ’22 and additional INR5,053.68 million loan raised in December 2024 to fund acquisitions. Both are floating-rate loans linked to a three months treasury bill and the repo rate respectively with an average cost of debt at 7.92% for FY ’25. I want to thank thanks to low net-debt to AUM ratio, the trust is well-positioned to finance future acquisition entirely through debt while maintaining the financial flexibility. The trust continues to enjoy the highest credit rating AAA with a stable outlook from ICRA Limited, rating and care rating. Fill trade receivables as on, 31, 2025 stood at INR854.10 million, representing 25 days of billing. Acquisition of balanced 26% equity shareholding, PG in its Q2 FY ’24-’25 earnings call had informed that remaining 26% equity share, equity stake in four of the SVBs, KATL, PPTL, WTL and JPTL will be acquired from PowerGrid during FY ’25. We are pleased to inform you that this acquisition was successfully completed on December 30, 2024. The development was duly communicated to all unitholders and the public through stock exchange filings and updates on our websites. Revenue from the acquired 26% stake in these SPVs has started recurring to PG from Q4 FY ’24-’25 onwards. Now I’ll come to the outlook. Our growth strategy remains focused on acquiring operational power transmission assets in alignment with regulations, requirements and the long-term interest in our unitholders. While we are fully committed in generating values to our unitholders, it is important to acknowledge that the limited availability of operational assets for acquisition continues to pose an inherent challenge a point we have consistently highlighted. At present, the pool of operational transmission assets available for monetization is limited. However, the National Plan for Transmission 2024 outlines an ambitious roadmap with an estimated investment of over INR9 lakh crores in the transmission sector.
This underpins the a robust future pipeline, currently 84 interstate transmission system, ISTS projects aboarded through, tariff-based community bidding. These are under implementation, of which 39 are being developed by private players. As these projects are near completion and become revenue-generating, they are expected to present a significant acquisition opportunity for infrastructure investment vehicle like PG InvIT. We continue to actively track the progress of these under-construction projects to remain prepared for near-term opportunities. In parallel, we are — we also recognize the potential of state-level asset monetization. Should states choose to monetize their operational transmission assets to raise capital, it could unlock a newer avenue of growth for PG InvIT. To support this, see a Central X City Authority in collaboration with PG InvIT conducted a dedicated workshop for the state on December 6, 2024 on monetization of state transmission assets.
Additionally, CIA has been placing this topic as an agenda item in various RPC Regional Power Committee meetings to assess and encourage the state utilities. While the process of state-level monetization may be gradual sustained policy engagement is underway to facilitate progress in this area. With substantial debt headroom, a strong balance sheet and the confidence of the diverse investor base, both institutional and retail PG is well-positioned to capitalize on upcoming opportunities in this sector. It is important to emphasize that any potential acquisition will be a subject — will be subject to a rigorous due-diligence process. Each opportunity will be evaluated for operational performance, regulatory compliance, alignment with — in with norms, norms adherence to our corporate governance standard and consistency with unitholder interest to ensure it is a value-accretive addition to the trust portfolio. We would like to mention our distribution guidance of INR12 per unit for financial year ’24, ’25, ’26. I again thank you and now I would like to hand over this moderator to the moderator for further proceedings.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen we will wait for a moment while the question queue assembles. The first question is from the line of Mahesh from ICICI Securities. Please go-ahead.
Mahesh Patil
Yeah. Hi, sir. Thanks for the opportunity. Sir, my first question is on the state-level, you know, monetization of state transmission assets that you highlighted. Just wanted to understand if you can give some details like are there some assets that have been identified or is this at currently at policy level that is being discussed? If you can give some details
Naveen Srivastava
Okay mister Mahesh, yes, it is already in the that it was told that state intrastate are to be monetized. And at present, I cannot say anything is there. That’s — which we cannot disclose, but we are in the process of — in the talks that whenever they are interested to demonetize, we are there to help them out.
Mahesh Patil
Okay. But sir, is there any visibility like, let’s say, in this fiscal is something likely to come up as per your maybe discussions with various stakeholders?
Naveen Srivastava
We cannot say any this one, but okay, the central government is clearly continuously touching with them and they are talking to them. And there we can see the visibility there from there the pressure will come. There is always a very — at present, we cannot say anything.
Mahesh Patil
Okay, okay. Got it, sir. And sir, my second related question is, I think couple of quarters back, you highlighted that there is some new policy from CA which allows you to go for ask from other private players. So is there — if you can give some details, what is this policy? And are you looking at any assets from other players at this moment?
Naveen Srivastava
Can you repeat again?
Mahesh Patil
You had mentioned a couple of quarters back that there is some new CA policy which allows you to be open for assets from private players as well. So just wanted to understand what was it and are you looking at any assets from other private transmission assets?
Naveen Srivastava
I don’t feel anything like that instead of seeing anymore.
Unidentified Speaker
No, actually there was nothing from CEA and as a matter of fact, there is no bar on CG for acquiring private sector assets as well. CA is into the picture for monetization of the state-level assets. So they are into the dialogue with many states. And as Chairman sir mentioned that we have been partnering with CA for many of the workshops and dialogues with many states. But unfortunately, yes, I mean, there is no concrete outcome as of now, but as far as the private sector goes, nothing and CA intervention is not at all required.
Mahesh Patil
Okay. So sir, the next related question is, are you looking at any of any of the assets as such from other private players. And another related question is, I’m not just talking about transmission assets. Are you looking at any other-related assets like renewables, etc or is that not on the horizon right now
Naveen Srivastava
As far as that discussion with the state we cannot disclose it right now it okay but just whenever we get a like opportunity we we’ll surely come out of it. At. At presently we are concentrating on the transmission aspect.
Mahesh Patil
So if you want to get us there. Got it.
Unidentified Speaker
Yes, just in the opening remarks, Chairman had mentioned that on the private side, there are not many opportunities available and there are around more around 30 plus projects are being — are under-construction by the private sector developers, which would be hitting in the next couple of years, which may present. So this has already been highlighted in the opening remarks.
Mahesh Patil
Sure, sir. But renewables we are not looking at, correct? As you just confirmed.
Naveen Srivastava
I think the market once you know there is something yeah. Yeah, presently nothing we can it off.
Mahesh Patil
Okay. Okay, sir. Got it. Got it. Thank you so much.
Operator
Thank you. The next question is from the line of Ankit Minocha from Ventures Family Office. Please go-ahead.
Ankit Minocha
Yeah, hi. On this distribution that you have mentioned for FY ’26 of INR5 per unit, I believe last year also it was INR15 per unit and we had to dip into some reserves and it was above the tipulated cash-flow guidelines that we had to give. So how are we kind of managing this INR12 per unit distribution for the next year as well? Will you be planning to dip into reserves again or is there some sort of accreditive earnings or cash flows that you’re kind of seeing coming ahead?
Unidentified Speaker
So, Ankit, I mean, as far as the additional incremental revenue goes, these are the fixed revenue assets with limited scope of earnings through other means. I mean, there is no scope of organic growth in these assets per se. But having said that, you must-have noticed in our reserves that our data days have reduced substantially during this fiscal ’24, ’25. And as a matter of fact, we started with a cash of INR216-odd crores in May ’21 when the invent was started and we were roughly at INR400 odd crores, INR398 odd crores at the — as at March ’25. So in fact, the cash has increased and the primary reason was reduction in the datas or the battery data realization. So saying that we are dipping into the reserves in a big manner is a fallacy per se. And we believe that with this kind of debtor turnover, we will be able to deliver the guidance given by the Chairman sir of INR12 for fiscal ’25, ’26 as well.
Ankit Minocha
Okay. Thank you. Fair enough. And secondly, just an extension to the previous participant questions on acquisition. I believe there were — so I just want to be clear, in the current year, in the next one year, should we as investors be looking-forward to PG doing some acquisition at all or do we think that there might not be any acquisition on the table?
Unidentified Speaker
That we cannot say no, but we are in the continuously this way. If we get a good chance, we’ll surely come out of that.
Ankit Minocha
And these private projects that you mentioned were on the verge of completion when — when do they kind of start coming into your investment purview and when do you think you can start visiting these discussions or phase when does the first project come online.
Unidentified Speaker
Maybe in two years’ time they will be in a commissioning stage and they will be requiring and then we will surely I feel it will — within — after two years’ time this will come out.
Unidentified Speaker
Okay. And at the end-of-the day, this will depend upon whether the asset owners want to monetize their assets or not. But at least, yes, there is a lot of pie that is coming up for monetization will be for completion, not monetization.
Unidentified Speaker
And as the regulations mandates that we have to acquire, InvIT can acquire only the assets which have the operating history of one year. So say if the asset matures or achieves the commercial operation two years down the lane, we can start the process per se, but the acquisition can only be made after one year of the operations are established. So yes.
Ankit Minocha
Okay. And is your existing sponsor looking to divest any further assets this year? Any view on the monetization from power grid?
Naveen Srivastava
From power grid side, it is not there at present.
Ankit Minocha
Okay. Thank you.
Operator
Thank you. We’ll take our next question from the line of Aniket Nikum from ABM Capital. Please go-ahead.
Aniket Nikumb
Hi, am I audible? Yes. Yes, thank you for the opportunity. My question is in relation to maybe some of the earlier questions. Sir, if you can talk a little bit about what the opportunity set could be for us maybe you know in the renewable side or in the battery energy storage side, et-cetera, can you look at some of those opportunities? Will you evaluate them? Our listed peer, Indigrid has sort of added some of those assets. So just wanted your perspective on this
Naveen Srivastava
So we are basically I can tell you this we are primarily on the transmission assets, we are on that. But I can say very well that if we get a good chance of — we find that this thing, we may go into that. And at present, it is basically like what you told about or renewable. Presently, we are more concentrating on the acquisition of the transmission assets,
Unidentified Speaker
The kindly also. I kindly also appreciate the fact, I mean, you must be a regular visitor to the market. So you must-have seen the kind of valuation that a company like NTPC Green got for its green portfolio. So you know, InvIT is not an instrument which can offer that kind of valuation to any — for any renewable assets. Though it is out of question. But having said that, as Chairman sir pointed out it — pointed out that if we get an opportunity wherein there is some value for our investors, we will be definitely having a look and then moving ahead. And for that, you know the investors will be appraised or informed accordingly.
Naveen Srivastava
And one thing that I want to add into that is basically the CA as well as they are continuously means educating the states to, you know, monetize their interest rates. So we are seeing some of the growth in that if you can — and they have called us also to have a training session. So we can see some growth in that area also. I have already told in my opening remarks that this much of works are coming up. So I can see a good outlook in transmission assets which are coming and they may go for their monetization.
Aniket Nikumb
No, fair. I appreciate that. So would it be fair if my understanding, I guess what from some of your comments is that there is a little bit of a valuation mismatch maybe that you’re seeing in some renewable side and so on, which is why you’re not doing, but otherwise there is nothing stopping you from doing it.
Unidentified Speaker
Now there is nothing stopping us, but we’ll see that if we find a good opportunity, surely we’ll come out to that.
Aniket Nikumb
Got it, sir. No, fair set. The other — maybe second question was as the interest rates have now fallen, would — what do you think can our cost of funds go down to and is there some uplift we can expect from there?
Naveen Srivastava
Definitely. I mean, definitely the interest rates are on the downturn thankfully so my cost of loan has come down to maybe 7.33 odd percent presently, which was more than 8% at one point in time. So as far as the uptick in the returns is concerned, yes, that return will always be passed on to the investors. But as you will appreciate that my loan portfolio presently is quite limited only INR1,000-odd crores. So it is not so substantial as to make a meaningful difference in the DPU.
Aniket Nikumb
Got it. No, that’s fair, sir. Again, I’m sure you can also appreciate, I think some of the questions here and maybe I speak for a couple of other people there is that, look, we are trading a little bit — our NAV is around 93 94, right, as you reported just now and we are trading on the market at a almost like 10%, 12% discount to that. So I think all of all the investors may be looking for a little bit of guidance on that. But no, appreciate the good work you are doing. Thank you so much and all the best.
Naveen Srivastava
Thank you.
Operator
Thank you. Thank you. Thank you. The next question is from the line of Diraj Thave from Samwad Financial Services. Please go-ahead.
Dhiraj Dave
Yes, can you hear me? Yes, yes, we can hear you. Yeah. Thanks a lot for providing me opportunity. My first question is basically when I look at the valuation report, broadly, while FY ’26 and FY ’27, we get approximately INR1,260 crore INR1,250 crore kind of revenue. But in FY ’18, particularly Pali, and Javalpur SS, we see almost kind of INR290 crore decline in the revenue as per the valuation report, which is on 31st March 2025. So can you just give us some perspective why we see because mostly the projects are like a fixed revenue base as a bidding kind of it. So why do these three assets we see such drop-in DSA?
Unidentified Speaker
This is basically I can say only one word, it is in-line with the TSA, I can say.
Dhiraj Dave
Okay. Now, so if that is the kind of thing, that’s perfectly fine. The second question is basically like if I look at our guidance, so FY ’26 at INR12 FY ’27, but if we don’t do any addition and we do not see significant decline in interest-rate, what should be a kind of like rather than just a yearly guidance, which is — I understand we are in very volatile one and difficult kind of ways. But if somebody is looking at say three to five years holding period, should one be prepared based on this to see decline and how much decline? Because even that would help market to assess our unit valuation properly. If you ask this thing normally, we cannot give any future production in that area. I cannot say in that the future what will be after three years or something like that.
Unidentified Speaker
But, you are very right in pointing out that if acquisitions are not made, you know, going-forward, the expenses will keep on increasing and with the declining revenues, 27 28 being the major year in which there will be a sharp decline. So the NGCF are going to bound to go down and so will be the DPU. Okay. But how much probably it will not be fair for us to answer that?
Dhiraj Dave
Just appreciate. The even direction is fine, but then what is the management thought? Because see, basically, while we appreciate your efforts on getting this asset and running, which itself with accident free all throughout FY ’24, which is quite a commendable thing and we appreciate management for that. But in fact, that’s — in fact even previous investors expressed the concern about discount and I think market is discounting that factor because for last three, four years, we have added like 24% or 26% whatever minority stake of power remaining that we’ve acquired. But after that we don’t see and like it will be managed for two years, effectively, it started discounting it assuming after two years, INR2 distribution, probably maybe eight, I also don’t know, but it would be something like that. And that is why we see this big drop-in or discount between NAV and current market, right? So any thought of management basically you have put prefer to you have said you are looking at say transmission line, but you said that anything else — anything what can break the gap in the sense that what can manage our distribution at INR11, INR12 in FY ’28 because that is a major concern.
Unidentified Speaker
Say since we have understood that the debt is going to happen because of the revenues going down. So the only way it can be corrected is by adding more assets so that the top-lines can increase. So that’s why we have been in touch with the states. We are trying to take full advantage of the government of India’s policy and advisories to the states, educate them so that they have come up for monetization of their assets. So we’ll keep looking at acquisition opportunities as and when they come up, whether on the private side or on the state side and that is the only way which can — by which we can have our revenue streams higher, so as to support a higher dividend payout post FY ’28.
Dhiraj Dave
Appreciate. My just one suggestion and basically whenever you are looking at acquiring asset, please look at consolidated way to minimize the — to ensure in a way that it becomes a tax-efficient. In fact, if you look at the current structure, you find significant dividend is getting into taxable rate. Well, that is not in your control because that assets kind of it. But any kind of NCLT structuring, restructuring, whatever way you can do, just a thought, you can and probably make this dividend as a tax-friendly to the investor. So everybody gains in the process. Wish you all the best and thanks for providing me opportunity.
Unidentified Speaker
Thank you. Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer questions from all the participant in the call, please limit your questions to two per participant. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go-ahead.
Sarvesh Gupta
Good evening, sir. Hello, are you — am I audible?
Naveen Srivastava
Yes, yes, you are audible.
Sarvesh Gupta
Yeah. Sir, just one question. So given that in this valuation report, we have declared an LAV of close to around INR94, INR95 rupees and our weighted-average cost of capital is around 8% for all the assets. So roughly, if we don’t acquire, then from the current price the yield to maturity is around 9% odd. Is that the right understanding, sir?
Unidentified Speaker
Sarvesh, we will refrain. You are free to do your own maths. It’s our humble request that kindly do not seek that valiadtion from the management team. You can do your math. But the numbers are in open. So yes, presently, the discount rate is there. Last September, it was 8.78%. Last year, it was somewhere around 8.85% or 8.95%. So that will keep on fluctuating, basis the movements in the interest rate market and the equity risk premium. And there is no guarantee that the interest rates will not be on the boil again or, for that matter, the equity premiums will not be on the rise again, which will affect my valuation and accordingly, the NAV. But this NAV has hardly to do anything with the IRR that an investor can extract holding till maturity. So for that, probably you can have a look at the cash flows which are being presented in the valuation report and do your own math. That will be more beneficial for the investors, I can only say.
Sarvesh Gupta
Okay. And secondly, sir, if I look at your INR46.5 that distribution that you have given, so roughly around 20% odd has come in a tax-free manner, mainly because of some of it is rooted in the form of capital repayment. So is that the same ratio which is going to be there in the coming years? Or are you seeing some changes or are you sort of pushing for some changes to make it more tax efficient? Or how should we look for that?
Unidentified Speaker
Sarvesh, there is no scope for further tax efficiency as of now. So going forward, probably, the repayment of SPV debt will be something which will start accruing more often and in a greater quantum. But as per the Companies Act, dividend can only be paid out of the retained earnings or for the profit of the current period. So retained earnings, we have already taken to a very large extent, not much is left.
So whatever the profits these companies are going to throw up, that will be upstreamed in the form of dividend. And you very well appreciate that the costs are bound to increase due to the inflation. So if the revenue is constant, costs are increasing, the PAT is bound to come down and so will be the dividends.
Sarvesh Gupta
Yes. So our exempt form of dividend will also come down, is it? So what would be the rough guidance for, let’s say, dividend exempt and return of capital that you are going to deliver?
Unidentified Speaker
Exempted.
Naveen Srivastava
Exempt dividend and capital repayment.
Unidentified Speaker
Flowing from the valuation reports, actually.
Naveen Srivastava
Naveen Srivastava: You can see the valuation report, in that, we have already declared in that. I don’t —
Unidentified Speaker
See, 76%, 78% of our debt is to be paid after 10 years. So you have that particular information also available with you. And as my colleague, Amit, just told you that the valuation report provides all the numbers to do your own analysis of what numbers would look like. We would not like to crystal gaze into the future in saying that this is how the percentage composition of various upstreaming would look like.
Sarvesh Gupta
But in general, I think what you said is that —
Operator
Sorry to interrupt you, but we request you to rejoin the queue for follow-up questions. Thank you. We will take our next question from the line of Jay Kumthekar from Motilal Oswal Financial Services. Please go ahead.
Jay Kumthekar
Actually, I don’t have a question, it’s more like the data that you have shared today and the stats, can you share us in writing, basically, or the slides?
Naveen Srivastava
It is there on the exchanges as well as on our website itself.
Jay Kumthekar
It’s on the website. Okay, that’s the slide that I am supposed to refer to, right? Everything is there on it?
Unidentified Speaker
Yes. Yes, there it is.
Jay Kumthekar
All right. All right. Thank you so much.
Operator
Thank you. We will take our next question from the line of Nilesh Doshi from Prospero Tree Asset Management. Please go ahead.
Nilesh Doshi
Thanks for the opportunity. sir, many investors have asked about the acquisition. But my question is, is the acquisition only route to add the new operating asset? Can PGInvIT itself not able to develop any operating assets?
Unidentified Speaker
That is clear cut. It is not in the regulatory, see RTM projects which are coming to Parli, we are generating ourselves. So that is coming out, in RTM project it is coming out. Other than acquisitions suppose we are, that question was asked earlier also, we are thinking an opportunity. If we get an opportunity, surely we will go in that.
Nilesh Doshi
Nilesh Doshi: But you are saying that PGInvIT is not allowed to develop any asset, they have to acquire either from the private player or from the public sector units?
Naveen Srivastava
No, no. Nilesh, kindly try to appreciate how the transmission sector works. I cannot build my line anyway I wish to. It is a licensed activity and it is a planned activity. So the Government of India, there are different committees and different forums where the transmission systems, depending upon wherever the strengthening are required, or for that matter, where the generations are coming, the Committee approves that these many transmission systems are required to be built upon, and either it allots those transmission system on the nomination basis under the regulated tariff mechanism to the existing holders of the asset or bids it out under the TBCB mechanism.
So unless and until, as Chairman sir pointed out, that we got 2 of the assets or 2 of the projects, one in Kala Amb and one in Parli, through CTUIL on the nomination basis. But as an infrastructure trust, we cannot go and quote under the TBCB mechanism because that is not allowed as per the Government of India guidelines. So I cannot go and build the asset on my own. So that is the basic principle, where upon the transmission sector is functioning in India.
Operator
Thank you, Sir. We request you to rejoin the queue for follow-up questions. The next question is from the line of Gopal from BigTech. Please go ahead.
Gopal
Good evening, sirs and congratulations on delivering great numbers and projections. I would definitely like to congratulate the management of PGInvIT. My question around here is when we have projected INR12 as DPU for FY ’26, definitely, I think you must have taken all the revenues that are coming in, and the results, et cetera, into account when you are putting the numbers together. Is there any rough number that you have estimated that you will take the money out of these results that are there?
And second one, a follow-on to this is, okay, I have been listening to your explanations about the dip that’s going to happen in FY ’28. What is the additional revenue that we need to bring in to make this INR12 perpetual payment in the coming years? I think these are the 2 questions, sir.
Unidentified Speaker
Thank you very much for appreciating our figures. The first question I just want to tell you, as you see that this time we have taken 101% of that, maybe around 1%, 1.5% extra. I feel out to be that will be continued in next year maybe. I cannot declare how much it has exactly come out, but since RTM projects are coming up, the revenue we can think of that way. But that’s why we have calculated it should be INR12.
Gopal
That’s fair, Sir. The second question, probably —
Unidentified Speaker
Can you repeat? What is the second question, can you repeat it?
Gopal
There’s going to be a revenue decrease that’s going to happen in FY ’28 and going further. I think that’s what I was looking at. So what is that delta that you need to add or the revenue to maintain INR12 DPU perpetually being paid for maybe next 5 years, 10 years, whatever?
Unidentified Speaker
Of course, you know that we are keep on telling that we have to come out with some assets in our portfolio, we have to add the assets and we have to do in that. If it comes, then it will be surely build on —
Gopal
How much is that gap which is going to arise —
Unidentified Speaker
See, Mr. Gopal, just now one of your fellow colleagues mentioned that dip that is going to happen from FY ’25 to FY ’28. So now if you want to maintain the same thing, you need to take care of that dip to bring it back INR12.
Gopal
Correct. The same thing I am asking, Sir. How much is the gap that you need to–
Unidentified Speaker
Gopal ji, I am paying out INR273 crores odd per quarter, all right? So INR273 x 4 will be my annual payout of INR1,092 to maintain INR12, right? If you go through my valuation report, during the year ’27-’28, my top line will be roughly around INR900-odd crores, right? Presently, my EBITDA margin is somewhere around 94% odd. Keep an inflation rate of, say, around 5% in that expense side. Those numbers are for yourself to work out, Sir. What else can I say? Those are very much crystal clearly available in my valuation report.
Gopal
Okay sir. Perfect. Thank you. Thanks for that input, sir.
Unidentified Speaker
Thank you.
Operator
Thank you. We’ll take our next question from the line of Harad Gupta from Fairvalue Capital. Please go-ahead.
Bharat Gupta
Hello, am I audible?
Naveen Srivastava
Yes, yes, it’s audible.
Bharat Gupta
Okay. Just one quick question, sir. In your valuation report, you really clearly looked out all of the assumptions for revenue as well as expenses. So just looking at any of the assets, the O&M expense is the largest expense. First question is, it’s just contracted with power grid sort of over a longer-term like the TSA so that the charges are fixed? And second is, the value you have estimated assumed escalation of 3.5%. Do you think that is reasonable for your larger given that you just now check it’s 5%.
Unidentified Speaker
See, O&M contract, it is continued and it is going to cover by 2026 I think and after that it will be further — it will see that to go into that. It will be — same, we’ll see that it will be given to the same because is sponsored to us and we are seeing that there is continuously we are getting a good O&M work and they are the person who has constructed it, who is operating it continuously and their manpower is also there. So it will be always a, you know, beneficial to all of us to continue with them.
Bharat Gupta
Yeah, but the rate will be renegotiate right.
Unidentified Speaker
So there are — as far as — see, here I want to say, it is basically what we are doing it. We are not basically our negotiation based on the CRC, you know O&M charges what they are telling. If there is a change in that, there will always tell. Otherwise, I don’t think there will not be any much difference will occur in that way if it is — but because power grade is sponsored, so I feel out to be there will not be much in that. They will not so — because for them, it is not a very profit-making item to — they will come out of that. So it will be like almost same, I feel also.
Bharat Gupta
So for the 3.51% you have assumed
Unidentified Speaker
No, that is okay. There may be — there may be — we will negotiate, but I cannot predict it right now what is them to decide. But I can say why — we will try our level best to put it in that area, but it is them to decide. But I don’t think being is a sponsor to this organization, they will do something extra in that.,
Unidentified Speaker
I think the assumption table in the valuation the valuation itself indicates that this is what we are presuming as of now. We’ll revisit it as and when the situation comes.
Bharat Gupta
How long are the contract? See this, as
Unidentified Speaker
Sir just mentioned, the recent running contract is valid till March 26 and this will be renewed after that.
Bharat Gupta
So when did it start?
Unidentified Speaker
Maybe around the last quarter, yes, maybe in the last quarter?
Bharat Gupta
Okay, okay. All the — so what has their behavior been in the past?
Unidentified Speaker
Really? That was — this will be the first thing, the second. This will be the second, you know extension, if at all it happens. Last-time it was on the very same terms and conditions. And so I think it has been nothing more than a speculation if we say anything. So we request you to be patient for some more time. Maybe six months down the line, we can talk again and praise the investors regarding the development on this front.
Bharat Gupta
Okay. Thank you very much, sir.
Unidentified Speaker
Have a good day.
Operator
Thank you. We’ll take our next question from the line of Nilesh Doshi from Prospero Tree AMC. Please go-ahead.
Nilesh Doshi
Thanks for the opportunity once again. Sir, last year we have acquired the balanced 26% stake from the whole SPV. So how much it is distribution accretive by acquiring this assets, how much distribution can be increased or what benefit we have acquired?
Unidentified Speaker
Sir, thank you for the question. I can say that after approval of unitholders, we have — the test has completed the secursion of 26% of all the four SCVs. The objective of acquiring the — any these deposits is to give some bump-up to the returns to the unitholders or elongate the life of consistent return over some years. The baseline remains that it needs to result into some kind of value accretion to our unitholders. So obviously, it has been a somehow to any cost of debt plus some risk. However, it will be very minimal. And you see that now this 26% dividend which was to — was going to the power wind or it is it in Vietnam.
Nilesh Doshi
Okay. Okay, sir. Because from one or two years, our revenue will come down. And I had mentioned earlier that because of the inflation cost will increase and so the net — naturally the distribution may come down after one or two years. So whether that acquiring the asset, which has a reducing revenue profitability is what decision or acquiring the press asset is a more what decision?
Unidentified Speaker
Always see, this 26% has been acquired, one for the 100% ownership as Chairman mentioned. The other thing is then there is — the SPVs are also building some assets under the regulated tariff mechanism. So as we have been told that one asset is being built-in Parli and the other in Kalam. Now by acquisition, the 100% proceeds of these new assets also comes back to the InvIT only, which otherwise would have been distributed to the sponsor also to a 26% extent. Then the dividend whatever we was going to the SPV to the sponsor is also coming back to the. Now for this, we have acquired some — this all acquisition has been done from some debt. So after the income and the debt that we have to repay for this to — which needs to be serviced, it leaves a very small positive margin for us, which is not detrimental to us, but definitely it’s not significant enough to make any significant change in the kind of that you are expecting.
Nilesh Doshi
So the acquisition was more from the controlling point-of-view rather than the distribution mode, redistribution. Is it right?
Unidentified Speaker
Yes. Yes, yes.
Nilesh Doshi
Okay. Thanks, sir. Thank you, sir. That’s all from sir. Thank you.
Operator
Thank you. Ladies and gentlemen, in the interest of time, we’ll take this as our last question. I now hand the conference over to the management for closing comments.
Naveen Srivastava
So I’m really thankful to all the thank you very much any. Thank you very much Nidhi for and your team for an artful thanks to all the participants who have joined us in this call. Sir, hi, on behalf of management, generally where your active involvement in PG earnings calls and we eagerly anticipate continued interaction with our investors through these calls. At PG InvIT, we remain committed for providing consistent, stable and visible returns to our valued unitholders. For my whole team, I just again wants to express my deep gratitude and anticipate your ongoing support and confidence in. Thank you. Thank you very much.
Operator
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.