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

Axis Direct's research report on India Grid Trust

India Grid completed acquisition of three ROFO assets (MRP*) from its sponsor, Sterlite Power, at discounted valuation of Rs 14.1 bn vs. Rs 14.9 bn indicated in Oct’17 and Rs 15.7 bn that by independent valuers. India Grid has also signed agreement to acquire third party asset (PTCL#) from Techno Electric for Rs 2.3 bn.

Outlook

We believe both these above mentioned acquisitions are IRR and DPU accretive; will raise portfolio IRR to 10% (vs. 9.2% earlier) and increase DPU to Rs 12 (vs. Rs 11.4 earlier). We maintain BUY with TP of Rs 105 on high earnings predictability, strong parentage, robust pipeline of sponsor’s assets and average DPU growth of 3-5%. p.a. For all recommendations report, click here

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