Power Grid Invit - II

Has it corrected enough ?

Amidst the ongoing trade tensions, my thoughts naturally turned to assets that might weather any potential storms unleashed by Trump's policies. One investment that immediately stood out was PGINVT.

Why PGINVT, you might ask? Firstly, it has seen a significant correction and is currently trading below its book value of ₹85. Secondly, its existing cash-generating assets appear remarkably stable and, crucially, insulated from direct trade tariffs and their immediate economic ripple effects. After all, electricity consumption in India isn't likely to plummet due to trade disputes.

However, the question that keeps nagging me, and perhaps many others, is: why the persistent selling pressure on PGINVT? As I explored in my previous post (PGINVIT PART-1), the core concern seems to be the lack of clear growth prospects. If PGINVT can't acquire new assets from the market, the current Distribution Per Unit (DPU) of ₹12 could start its descent from FY26-FY27 onwards. Interestingly, their own valuation report suggests a Net Asset Value (NAV) of ₹85.28 if we consider a cost of capital of 8.79% and assume zero future growth. This brings the current trading price even further into question.

So currently at Rs 76-77 its trading roughly around 9.5 % YTM (yield to maturity) give the duration of assets is 25 years or so.

First question you would ask is it good enough ? For me yeah okay given its AAA rated asset but my goal is to atleast make 12-13 % for that the price really has to fall to Rs 60 or below lol, which i think is very unlikely but if that happens i think one can seriously think of buying chunks of it.

Okay one more positive about this INVIT is they have negligible debt on the books Rs 600 Cr or so on the AUM of Rs 8500 Cr. so they have lots of headroom to raise debt and acquire assets meaning without diluting equity. So in future if they do acquire any assets it will be DPU accretive.

Now the canary in this coal mine is will they be able to acquire assets in future ?

Sad part is they can’t even acquire from their parent Power Grid. Not even the 26% of the assets they already own ( talked about it in my previous blog) basically their own sponsor is not interested in selling them the assets.

And Currently the NAV is Rs 83.07 in Q2 FY25 as per the conference call. The conference call is hilarious by the way but what really caught my eyes is this -

Why I’m Done With This Company – A Final Word

It's hard to believe the kind of response we've seen from the management—one that, in any serious private company, could easily warrant immediate dismissal. The lack of financial understanding and sheer ignorance on display is staggering, and unfortunately, it's reflected in the company's current market price of ₹76.

What’s even more concerning is the total disregard for performance. Over the past 4 years, even assuming an optimistic exit at ₹87 NAV, the total return would be around 27% ((87+40)/100)—translating to just 6.16% annually. That’s even below the yield on government securities, which offer nearly 7% with far less risk. Worse still, this return hasn’t even managed to beat inflation.

The core problem? This business seems to have been on autopilot for the past 4–5 years. Management has evaluated only 3 deals, with nothing meaningful to show for it. To make matters worse, even the sponsor appears to have distanced themselves, leaving the company adrift.

This will be my final post on this company. It’s clear to me that not only is it not worth investing in—it’s not even worth the time spent analyzing anymore.