over past six months PG INVIT has been sliding down and has come to interesting levels… of INR 76/77 per unit…this is the price which can provide a safe 10% post tax yeild for several years even after considering all negatives like uncertainity over asset addition. public sector babu based management,depreciation in asset quality, gradual slide of NAV etc etc… the attraction increases as the unit price drops further…intitial investors especially insurance funds,mutual funds and foriegn investors seen slowly exiting over past three quarters as individual investors are buying…interesting times…
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PGInvIT shares have been falling mainly because of the depreciating net asset value (NAV) and the fact that they are not adding any meaningful assets to their portfolio. The bigger concern driving institutional investors away is the fear that PGInvIT won’t be able to sustain its current ₹12 dividend payout. As of now, there’s no strong visibility on future growth, and without growth, dividend sustainability comes into question. That’s why large institutional investors are exiting. If PGInvIT shows any clear signs of growth — whether through new asset acquisitions, better revenues, or even a slight increase in dividend — this InvIT could turn into an alpha story and the sentiment could flip overnight. But until that happens, the price is likely to remain under pressure. Whether they raise dividends or not is, at this point, pure speculation because there’s no concrete proof to support it. If they continue to operate exactly like they have for the past few years, then it’s almost certain that they will struggle to maintain the existing ₹12 dividend. There are too many moving pieces that could change the story — regulatory changes, raising liquidity through a rights issue or more debt, the type and quality of assets they might acquire in the future, and how they fund these acquisitions (whether through equity, internal accruals, or debt). For now, the only logical approach seems to be patience — hold the units and pocket the hefty dividend while keeping a close watch on how their strategy evolves.
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IMHO… Firstly…
it will be prudent to consider (abundant caution) a steady state INR 9 DPU ( with current assets) … Powergrid management cleary stated the NMP ( National Monetisation program of NITI AYOG) document as a spoiler in dishing out assets to invit…hope some wisdom prevails on Babudom and they change GST rules on asset transfer in instant case…
Secondly… the decrease in asset value could be due to depreciation rules… but for well maintained trasnmision assets the replacement value should logically increase overtime…This dichotomy could create hidden value…I am unsure about actual impact…
disc …invested at todays price
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seeing this ‘More Assets in PGINVIT’ small titbit above, I am reminded of
In "The Shawshank Redemption, one of my favorite movies " Andy Dufresne famously states, “Hope is a good thing, maybe the best of things, and no good thing ever dies,” emphasizing the enduring power of hope even in the face of adversity
Hope it is, for PG invit investors.. They have the power to take more debt (due to very less leverage so far) and I hope better sense prevails and regulatory hurdles like GST , which has been hampering, goes away. All this requires leadership and persistence…and that is always a rarity in sarkari nature of these institutions
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At Rs.76 per unit the IRR > 10% assuming no new assets, assuming payouts for 20 years (should be more than that) tapering from Rs.11 to Rs.6 pa over the years uniformly. Looks interesting, am i missing something??
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You are not missing anything. Its just the negative sentiments about this stock that has made it so cheap. A classic “Dhandho” investor’s pick.
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What is wrong with the stock today and why its trading cheap beautifully summarised
This is how typically PSUs in India operate. Bosses are not super biz savvy.We need to focus on value and compare it with AAA debt opportunities.
Expecting 12-13% returns in a volatile world is not a great idea even from equity considering the fact that Nifty has given just 10.5% in last 10 years.
So close to 10% almost assured return over decades is not a small feat. Highly rated FD/bonds is <7% for long duration.
Infact PGInvit can get to >12% returns over 20 years if govt policy were to change which is likely over medium term. Energy/Power security/Infra is always high on agenda.
It has started catching attention of hybrid funds
With negligible debt they are sitting on huge firepower which gets unleashed with policy changes. Let us not forget how PSUs went on to mutibaggers in recent past with policy thrust.
The Hindubusiness has been bullish on this. I like their analysis as they are consistent and base their recommendations on value and not market performance.
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its yielding 9.5% pre tax and duration is 25% years. Any financial literate would know its not a good yield in India and its not bond if they default on coupon payment you will not get their assets (down side protection) although its very very unlikely but what are their assets ? 76% holding in some transmission lines ? can’t even acquire rest 26% ? there are many holding companies like in markets 
According to their latest communication in March PPT, they mentioned acquisition of balance 26% has been completed in December, 2024.
Many errors here -
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Even parent POWGRI is Not interested in selling to them - they are currently not able to sell due to govt order on PSU monetization and GST treatment - still that is resolved it wont be
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NAV is just another metrics to validate your investment thesis but a hybrid instrument like INVITs you treat it as long duration bond (like 30 years ) and judge YTM - also given its low risk debt profile (soverign rated AAA) eventually govt will use them to monetize assets to free up capital for Transmission asset and BESS builders - invetment needs in Transmission and BESS are in the order of ~200K crore and they are only a few companies have low leverage to play fully in this
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Not able to finish the remaining 25% stake - this is already done
Real issue is low visibility of asset addition - once they add a couple prices will normalize - thats how any asset pricing happens
I dont know any asset in current scenario where next 25 years Cash flow is known to last rupee (w/o even addiing new assets) = that gives close to ~13% Pre tax yield not bad for a AAA asset.
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Thanks for explaining it so well.
Invit being compared to equity is a big NO. It is an asset class in itself.
In India equity return of 2020-24 is being taken for granted and in hindsight appear to be risk free. People forget that those returns came in wake of loose monetary policy from a very low levels.
Whereas PGInvit has AAA rating, sitting on negligible debt, getting into benign interest rate scenario.
Let us not forget that market traded Sovereign Gold Bond at ridiculous discounts till recently. Despite SGB carrying 2.5% interest rates and capital gain being tax free. People were driven by market pricing and found reasons not to buy SGB much cheaper and bought Gold ETF as that traded at par.
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INVITs are hybrid instruments - neither 100% debt or 100% Equity - like a reverse EMI (you recover both interest and capital over a period of time)
Given the chracteristics you have to look at IRR (i just used yield as a proxy). IRR is also quite high given risk profile
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This will increase the mutual fund investments and also lead to better liquidity and price discovery.
Please read all informations regarding the company before making such statements. There are no facts in any of your statements and this may mislead a new reader who cannot distinguish between a savvy and a naive.
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