I have few questions more.
If reit/invit have to distribute 90% of their revenue to unit holders then how can they distribute this major share of amount in capital payback.
Does that means unitsholders are happy to trade for short term taxfree distribution. Something missing?
Distribution structure is depended on type of loans extended to the SPV and return from SPV to Invit.In particular case of IRB Invit, you can see ROC on higher end as most of their Principal from 2 outgoing project in March/May is being returned. After this distribution also, Balance Capital is around 87.9 in IRB Invit and this has to be returned in coming years apart from Dividend/Interest Income.
If we consider Invit to be a perpetual instrument with regular addition of new projects, return of capital is a great incentive for taxation purpose and practically we get 50% tax free return. Noteworthy is a point that NAV of IRB Invit is still around 100 considering extension of projects.
Management is also optimistic on high inflationary numbers and 4 projects are going to get a 8% annual increment this April.
On Q3FY22 con call management provided guideance of distribution of Rs 7-9 per unit in FY23 despite two major contibuting road assets moving out of project. I tried to do some calculation to find out what distribution I can expect from the assets, assuming remaining assets provide same normal NCDF (adjusted for exceptional events).
Find enclosed my wokring for same.
NCDF are in Rs lakhs. Talegaon Amravti, Jaipur Deoli and Omalur-Salem-Namakkal are average for last 5 half years NCDF. Pathankot Amritsar NCDF are for 3 half year ending 1HFY21 (projected was closed due to farmer protest since then and just restarted collection in December 2021) and For Timkur Chitradurg Project I assumed same as for 1HFY22 (as there was very volatile cashflow in previous half yearly NCDF).
IRB InvIT can expect to receive ~ Rs 145 cr as NCDF for 6 months from above 5 projects assuming no traffic growth/normal maintenance and no toll revision. This would mean distribution of ~ Rs 2.5 for 6 months ( Rs 1.25 per quarter) assuming whole NCDF is distributed.
Further for Q4 FY22, I expected around Rs 100 Cr collection from Surat Dahisar and Rs 40 Cr from Bharuch Surat assets, which give further distribution of ~ Rs 2.4 for Quarter.
So in Q4FY22, I expect distribution of Rs 3.66 from IRB InvIT.
Similarly in Q1FY23, only Surat Dahisar would work for April-May 2022 can provide NCDF of around Rs 66 Cr, which can translate in distribution of Rs 1.15 per unit in Q1FY23. In 5 continued assets, we expect distribution of Rs 1.25, so we can expect Rs 2.4 per unit as distribution in Q1FY23.
Then on, in Q2FY23-Q4FY24, assuming again only distribution of Rs 1.25 per unit per quarter, we may expect total distribution of Rs 6.15. This does not assume any traffic growth and toll revision which expected to be in double digit by management due to high WPI.
On current price of Rs 55, I found yield of around 11% which I found attractive in current environment and hence added my holding.
Disclosure: I added around 20% of my current holding in IRB InvIT. My view may be biased due to my holding. I am not recommending any investment in the units. I am not SEBI registered advisor. I have been wrong mutiple times in my projection and IRB InvIT management also have been generally very optimistic in projection as per past 3 year since listing. Investor shall be their own due diligence before taking any investment decision.
Thanks Dhiraj for supporting your fresh investment with numbers.
I feel management may not give 3.1 Distribution on Q4-2022 and restrict itself to around 2.1 to 2.4. This will ensure their guidance of at least 8.5 total distribution for 2022. Balance will be carried for next year so as they can comfortably distribute minimum 7 for 2023 post 2 assets are out of their portfolio.
Toll revision of 4 projects on 1st April is a given considering Dec WPI was 13+ and 0.4% of same is 5.2%. So an increase of around 3% + 5.2%=8.2% will be a good boost for coming years.
Inflatory pressures are likely to remain for next 2/3 years and this will help Invit in maintaining minimum 7 distribution in coming years(Traffic increase and an accreditive new asset will be boosters).
Wit Return of Capital of 87.9 still outstanding on books with current assets, we can have a near 50% distribution as Tax Free.
Above assumptions have made me to shift most of my family debt portfolio into this Invit and I am regularly investing in range 37-55 and my views can be biased. I feel any new asset addition announcement will rerate Invite to higher 60 levels and these levels of less than 55 may not come again post that announcement and management confirmation of perpetuity of Invit for long run. 104 NAV from independent valuators give comfort for investment theseis at these levels and margin of safety available.
e549e159-59c8-4ebe-b350-178579059fc4.pdf (479.3 KB)
Toll revenues update by IRB. Seems management is getting active on regular engagement and updates. Hope they share an update on New Project to calm investors.
Two positive developments for IRB Invit:
the VK1 HAM project has received provisional certificate and is eliggible to receive b-anual anuity payments from NHAI. THis should imply that in the coming months (hopefully) IRB infrastructure will give this project to IRB Invit. https://www.bseindia.com/xml-data/corpfiling/AttachLive/a7a760eb-07c4-446a-99d7-a26fbe3a46be.pdf
For the first time in a long time, i have seen insider buying. Poonam Nishal, Head - Strategy and Investor realtions of IRB Infrastructure bought 20,695 units of IRB invit. Insider buying is mostly a positive sign that some trigger is on the anvil for IRB invit.
Disc: invested and adding on dips
There was a recent announcement that all toll fees for Roads have increased from 6 to 13% in different areas. Does this help increase revenues and profit for IRB?
Please refer earlier posts in the thread and increase of 8+ percent is already affected from 1st April for 4 projects. Valuation of IRB Invit are based on these annual increments which are related to WPI and potential increase in the traffic. Extension due to Covid and Farmer protests have resulted in pushing the Toll extension to a new later dates and this is very goof for long term investors, IRB Invit is currently at 50 % discount to its valuations and I feel it can only go up when things stabilize and Managements brings more projects.IRB has already confirmed transfer of some of there HAM projects into IRB Invit and there are ample projects available in market. Based on management prudence they are just waiting for the IRR to be yield accreditive and than take a call . This year one new Toll Project is likely to get added and that will boost sentiment and push Market Value in High 60s of early 70s.
My views can be biased as I am significantly invested from lower levels.
c9e57d05-2380-45f9-af12-3461693b3522.pdf (564.2 KB)
Good growth in traffic for al toll projects.
Decent distribution. Rs. 2.60. Also, seems an acquisition of an asset is close(r): ““We are in active dialogue with our Sponsor - IRB Infra - for evaluation of likely acquisition opportunities and basis further clarity and approach presented - will be soon reaching out to our esteemed unitholders on way forward”
Disc : Invested. Initiated position in last 30 days.
Management had guided for atleast 8.5 dpu for year 2021-22 and have delivered as per guidance by distributing 9 dpu. Last concall they have advised a 7-9 dpu for year 2022-2023 and current rate still gives a return of 12.5% at lower end of the guidance. Any new project announcement is likely to bridge the gap between market price and the book value.
P.S: Invested at 37 levels in End 2019, biased, happy to have received 22 rs as DPU from those levels (including current distribution by 20th May)and margin of safety of investment has improved considerably.
““4th Distribution of Rs. 2.60/- per Unit, for the financial year 2021-22. The distribution will
be paid as Rs 1.20/- per Unit as Interest and Rs.1.40/- per Unit as Return of Capital, subject to applicable taxes, if any””
This fantastic distribution break up…
May 12 is the record date and money might be deposited by May 20, as per them
Block deal today. About 1.06 cr units at 52.04/unit. Seller was SHINE STAR BUILD CAP PVT LTD while buyer was PACE STOCK BROKING SERVICES PVT LTD.
Could just be an inter promoter / holder sale looks like given that the email ID for SHINE STAR BUILD CAP PVT LTD listed on Zauba corp is “@pacefin.in” which also happens to be the email extension for PACE STOCK BROKING SERVICES PVT LTD. Lets see if more details emerge.
The Q4 distribution credit hit my bank today. The distribution and the break up/TDS detail mail is yet to come up. Should show up in the next day or so. The next trigger here is obviously, addition of a project. Looking forward to it at some time in coming months.
In the meanwhile, one can keep a close watch on the monthly collection updates, coming up via exchange announcements.
I see that post covid, holiday rush, and general traffic has drastically increased everywhere and I expect a steady state incremental collection by a few % points…
Announcement on May 16th for April collection. This is the 1st month, after the hand off the Bharuch - Surat BOT on 31st March. And it is a 30 day month, in comparison to the March 31 days
IRB Infra planning to transfer Rs 2,500 cr assets to public InvIT
I did a quick comparison of the 2 invits IRB and INDIGRID for the pre-tax and post-tax yield calculation. Just input your average price and tax bracket (the 3 cells with yellow highlight) and you will be able to see what is the pre-tax and post-tax yields
Invit_Post Tax yield.xlsx (32.9 KB)
PS - These 2 invits are not directly comparable. Market has rewarded Indigrid and IRB invit has had a yo-yo journey in its history…but direct yield to yield comparison is given here based on FY22 distribution
Just heard the transcript of IRB INFRASTRUTURE, the new assets are likely to be added in 1st quarter of 2023 ( Jan/Feb2023 mentioned by Mhaiskar). Mr. Mhaiskar expects next 6 months to be used for the consulation paper to receive feedback from unitholders, then fund raising by IRB INVIT to buy out the assets.
WHY HAVE YOU ADDED 4% TO EFFECTIVE TAX RATE ?
4% is Education surcharge…it is actually on tax only… I simply added just to approximate. I am not prompt in paying advance tax and hence end up paying interest in most years and hence these are approximations to mirror that…that is why I had put it up as APPROX tax rate
I have just glanced through the latest valuation report (here). Couldn’t decipher the following litigation section. Appreciate it if anyone could explain. Can it impact the trust? Unit payments etc.? TIA