Buy India Grid Trust; target of Rs 105: Axis Direct

Axis Direct's research report on India Grid Trust

Q3FY18 net profit came in line with our estimate of Rs 688 mn aided by strong operational performance of Initial Portfolio Assets (IPA) with average availability at 99.9%. Net Distributable Cash Flow (NDCF) stood at Rs 1 bn with Dividend Per Unit (DPU) of Rs 2.9/unit paid as interest to unitholders. We believe, IndiaGrid is on track to deliver its FY18 DPU guidance of Rs 9.2 per unit (annualized Rs 11/unit).

Outlook

Further, IndiaGrid received unitholders’ approval for acquisition of three Right of First Order (ROFO) assets at EV of Rs 15 bn. Acquisition of ROFO assets will be DPU and IRR accretive – will boost DPU by 5% to Rs 11.44/unit and enhance IRR by 100 bps to 9.2%. Entire acquisition is expected to be completed by Q4FY18. We maintain BUY with TP of Rs 105.