By Geetanjali Kedia

IPO Size: Rs. 2,500 cr, entirely Fresh Issue  

• For debt repayment (gross debt of Rs. 3,568 cr as of 1.2.24)

Net Issue Size: Rs. 1,835 cr

• as Rs. 665 cr has been raised from sponsor Aadharshila Infratech at Rs. 100 per unit, under InvIT guidelines, representing at least 15% of post listing holding

Price band: Rs. 98-100 per unit (not share)

• Allocation: Minimum 25% for HNIs, maximum 75% for institutions, no retail quota

IPO Date: Wed 28^th Feb 2024 to Fri 1^st Mar 2024, Listing Tue 12^th Mar 2024

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Infrastructure Investment Trust (InvIT)

Bharat Highways Investment Trust (Bharat InvIT) is an SPV, comprising a portfolio of 7 operational road assets, on HAM basis, of GR Infraprojects, aggregating 497 km in Punjab, Gujarat, Andhra Pradesh, Maharashtra and Uttar Pradesh. Long-term debt is rated AAA by Crisil and CARE.

Double Digit Yield

Bharat InvIT is guiding for distribution per unit (DPU) of about Rs. 11.25-11.50, annually, to be paid quarterly. This implies a yield of ~11.50% pa at the upper end, which is over 400 bps higher than 7.1% risk-free government securities interest rate, but lower than AAA-rated IRB InvIT’s 11.8%.

On a post-tax basis, return from Bharat invIT is estimated at around 9.2%, as 55% distribution will be in the form of interest and dividend (taxable in investor’s hand at marginal rate of income tax (for most HNIs) while balance 45%, to be distributed towards capital repayment, will be tax-free in investor’s hands.

Discount to NAV: similar to peer

Adjusted fair enterprise value (EV) as of 30.9.23 is  at Rs. 6,343 cr, IPO price is 30% discount to fair value, but this is not as attractive a point, as peer IRB Invit is quoting at 33% discount (Rs 68 per unit against net asset value (NAV) of Rs. 100.6 as of 30.9.23). IRB InvIT has destroyed investor wealth in past 7 years, down 32% since. Thus, pricing at a discount to NAV does not guarantee scope for capital appreciation.