IndiGrid, the country’s largest Infrastructure Investment Trust (InvIT) in the power sector plans to add Rs 2,000 crore of assets under management (AUM) in the financial year 2024-25, the company’s CEO and whole-time director Harsh Shah told FE in an interview. The trust’s present AUM stands at Rs 28,500 crore.
“We are at Rs 28,500 crore, Rs 2,000 crore will be added just by the virtue of capex that we will undertake on our current projects that we have won,” Shah said. Stating that the InvIT is open to further additions to AUM, he said: “If interesting and large opportunities come up soon, then we can grow faster.”
In the financial year 2023-24, the company added Rs 6,000 crore of assets in its portfolio and have won bids for projects worth Rs 2,500 crore, registering a growth of 25% from the previous fiscal. IndiGrid’s “top priority” in FY25 is to execute Rs 2,500 crore worth of bids it has won, Shah noted.
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The company that recently acquired two RE assets – ReNew’s 300 MW solar project and 100% units of Virescent Renewable Energy Trust, will continue to look for acquiring more RE assets primarily focused towards solar projects. “Acquisitions as and when they turn out can add 10-15% of our AUM,” the CEO said.
Currently, IndiGrid’s portfolio consists of 19 solar projects across eight states of the country with a total generation capacity of 1.1 gigawatt peak (GWp).
Shah said that their size is about Rs 30,000 crore of which 20-22% belongs to the renewable energy assets. “It is a function of which of these asset classes offers us a good risk return opportunity,” he said, adding that transmission and battery energy storage systems (BESS) will continue to be the main game of IndiGrid.
The company has so far stayed away from acquiring wind energy assets as they are not scalable. However, IndiGrid is eyeing potential hybrid and firm and dispatchable renewable energy (FDRE) assets .
“We have stayed away from wind because we like to do things that we can do on a scale. At smaller scale wind projects, the overrates are too much and at a larger scale, it becomes substantially variable in our PnL (profit and loss statement),” Shah said. “Having said so, there is hybrid and FDRE becoming very active and maybe in a year or two if FDRE joint bids come then probably the variability is lesser, we will keep an eye for that.”
Moreover, even as the green hydrogen is the talk of the town, IndiGrid does not plan to acquire any assets in the segment as the contractual framework for such an acquisition is “not mature” enough for an InvIT.
“If somebody gives me a 25 year contract for green hydrogen then we will think,” said Shah. “Right now, all the contracts are not there.”
IndiGrid is optimistic of its growth in its distribution per unit (DPU) which has grown to Rs 14.2 per unit registering an annual growth rate of 3-5%.
“We have grown our DPU by 3-5% on year. It should translate into 12-15% return. That’s what we have been delivering. I don’t see a reason why it won’t continue,” said Shah.
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For FY25, the company’s DPU is likely to be guided by its recent acquisition of Virescent and 300 MW solar project from ReNew. “This year, based on the ReNew acquisition, it will add a lot of NDCF (net distributable cash flow), therefore DPU will increase this year (FY25) as well.”
The company has Rs 17,000-18,000 crore of debt outstanding at this point and do not see any immediate refinancing coming in.
“Right now, we see the rates coming down. And we have increased a little bit of exposure on the floating rate side. Last quarter we saw some of the refinancing done, expecting that floating rates would probably soften,” said Shah.
The company reported a 23% decline in its consolidated net profit at Rs 91.92 crore in the third quarter of the financial year 2023-24. The total income, however, rose to Rs 788.36 crore in Q3FY24 from Rs 607.06 crore in the same period a year ago.
With the equity fundraise of Rs 1,070 crore during the fiscal, IndiGrid ended its third quarter of FY24 with a net debt to AUM of 61.6%.
