Is swaping IRB InvIT (Rs 62) for Bharat Highway (Rs 113) a good trade at current levels for mid-long term?
Especially when revenue stream from annuity model is superior vs IRB’s toll collection
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What is preventing me from making the switch now ? (my 2 cents…someone else’s view can be different)
- for my bracket, it is a difference in the yield of 2.2% (with IRB being higher)
- Bharat has sharply risen in the last few weeks and anyone, who has seen the history of our invits/reits, you will recognize that honeymoon lasts for the first year or so and after that things start drifting. Even the much praised Indigrid, stabilized after KKR came in
I wish I had done this switch at the IPO time of Bharat (even IRB was trading at decent numbers at that time)…I am risking serious capital loss, by being in IRB since it seems to be in a non-stop slide down
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But isn’t annuity based income is interest rate sensitive? Wouldn’t it go down with interest rate ? Am I missing something.
Management themselves said so, though they tried to assure investor that they would hedge it with loan interest but they can’t achieve 100% hedge as of now cause invit has little loan.
Same here, especially last concall sounded alarming to me, like they were panicking that they couldn’t add new assets.
It’s big part of my portfolio as well since that kind of returns at AAA rating sounded like no brainer.
I think we need to differentiate rating of InvIT trust from InvIT unit investment. The AAA rating is to debt taken by InvIT to finance assets and they have supeiror claim over InvIT unit holders. InvIT unit is broadly comparable to equity. Do we consider credit rating of debt company and yield of debt paper as quasi equity return? No, in my view. Similarly, investor in InvIT is taking business risk and hence can not consider as debt investors. The interest on loan of IRB InvIT is around 8% which is equivalent to AAA credit rating paper for debt investor. Yield of 13-14% is not certain and would undego change with toll change, traffic change, interest change, asset termination due to ageeement and foced event (likr Pathankot road closure in farmer protest). The additional 5% yield to invIt investor is to assume all other listed and many unknown unlisted risk. This is my view and may be wrong. However , would advise members not to consider credit rating of InvIt trust and current yield on InviT unit as same have differnt risk profiles.
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ofc, it’s as risky as equity everyone knows that, I thought that was common sense. When I mentioned AAA it was shorthand for adequate liquidity and solid assets. wouldn’t write down every redundant detail in every comment about InvIT as an asset class.
How much is the dividend per share for this INVIT?
As per management commentry in last investor call, they have guided Rs 2/Unit/Quarter. However, this can not be taken as granted as it depends on toll income generated from assets. The current downward price movement indicates likely miss by @10 Paisa in current quarter. The downward price movement is also due to inability of management to secure / add good income generating assets.
The only saver for IRB INVIT will be adding new cash generating assets
(Same is the case for PG INVIT)
Somehow Indian INVITs REITs are not getting it’s due from broad investor base
Disc - invested in both
PS sitting on ~7% and ~40% capital loss in IRB & PG INVIT respectively
Is the dividend directly propotinial for indigrid as well?if that is the case why would an investor invest in these trust?
My thesis of investment was that share prices would rise when intrest rates fall as the cost yo match the yield or lower bank intrest rates