PGINVIT impairment of investments in subsidiaries and book value

As per value of PGInvIT’s equity holding, Total value = 11091+1513+6836+6298+4038 = 29776 millions = 2977 Cr.
NAV/share = 2977/91 = Rs 32
And thats wrong. I think both the methods are wrong.

As I remember that there is significant dip in revenue from 2027(around 20-25 %) and same can be checked in this year valuation report. I dropped my investment plan considering Indo Grid a better option for long run. Power Grid also doesn’t have much plans to monetise assets via PGInvit . Market already punished PG Invit from 130 to 95 levels and I may get interested if price drops to 80 levels.

But WACC (cost of capital) is taken as 8.85% in sep-2023 valuation. It appears WACC changes with respect to REPO rate. In 2021-22, WACC was 7.6%

If WACC is 7.5% due to repo rate reducing by 1.3% anytime in the next 3 years (high probable event), the share price can stay at Rs100 even if DPU reduces by 15-20% to Rs10 p.a. This must be considered while investing in PGInvIT.

I too think that asset monetization should be considered as a bonus and not something that can be taken for granted.


Enterprise value of pginvit is 84.7 billion rs per latest presentation - slide 5. That would mean NAV of around 93 with around 91 cr units. With no additional asset acquisition in sight, likely optimistic nature of these valuation reports and wacc numbers being what they are, this should be quoting well below NAV to have a margin of safety. Looking at current yield could be myopic IMHO

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Strictly speaking, it does not matter what the valuation report states about its NAV. The returns from PGINVIT is obtained from its distribution and not from its NAV. The REPO rate of 6.5% looks like peaking since the last time it was above 6.5% was in 2015 (9 yrs ago). So even now, the pre-tax yield of 12% is significantly higher. When rates come down to nominal 5%, even if distribution comes down by 20%, still PGnvIT gives a 2% yield higher than other risk-free investments.

It depends upon the investor’s perspective. Does one approach PGInvIT as a equity or a bond ? I view it as a high yield bond and IMHO, its already below its intrinsic value (Rs100-110).