8.2% India Grid Trust NCD issue April 2021 (IndiGrid Trust NCD) – Review

India Grid Trust NCD issue April 2021 - ReviewIndia Grid Trust NCD issue April 2021 (IndiGrid Trust NCD) – Review


India Grid Trust (IndiGrid Trust) is coming up with secured NCDs that would open for subscription on 28 April, 2021. India Grid Trust is a power sector infrastructure investment trust in India and Indigrid is registered as an InvIT (Infrastructure Investment Trusts) with SEBI. India Grid NCD interest rates are up to 8.2%. These NCD bonds are issued for 3, 5, 7 and 10 years tenure. Investors can get fixed income, either quarterly or yearly depending on the option chosen. Should you invest in India Grid Trust NCDs of April, 2021? What are the risk factors one should consider before investing in these Tranche-I NCDs of India Grid?

Also Read: Parag Parikh Conservative Hybrid Fund – Should you subscribe?

About India Grid Trust Limited

India Grid Trust is established in 2016 and a power sector infrastructure investment trust in India. IndiGrid is registered as an InvIT (Infrastructure Investment Trusts) with SEBI.

IndiGrid InvIT has assets under management of Rs 142,000 Mn by end of Dec-2020. It owns 13 operating projects, consisting of 38 EHV overhead power transmission lines.

Features of India Grid Trust NCD April, 2021 (IndiGrid Trust NCD)

Tranche I of India Grid Trust NCD opens on Wednesday, April 28, 2021 and closes on Wednesday, May 5, 2021.

These NCD’s are available in 6 different options. It offers NCD bonds for 3 years, 5 years, 7 years and 10 years tenure.

Coupon interest rates are between 6.65% to 8.2% for retail investors.

These are secured NCDs. Refer to security cover section to know how these NCDs are covered.

Interest payable quarterly or yearly depending on the NCD option chosen by the investor.

The face value of the NCD bond is Rs 1000.

Minimum investment for 1 bond. Means, you need to invest for a minimum of Rs 1,000. Beyond this you can invest in multiples of 1 bond.

These NCD bonds would be listed on BSE and NSE. Hence, these are liquid investments.

NRI’s cannot apply to this NCD subscription.

The base issue size is Rs 100 Crores with an option to retain over subscription up to Rs 900 Crores totaling to Rs 1,000 Crores.

These NCDs are issued on first come first serve basis.

IndiGrid Trust NCDs would be allotted on 11th May, 2021.

JM Financials Limited is the lead manager for the issue.

India Grid Trust NCD April-2021 Prospectus

India Grid Trust NCD 2021 Interest Rates


India Grid Trust (IndiGrid Trust) NCD Interest Rates - April,2021

*Category 3 / 4 includes retail investors

What are the credit ratings for these NCDs?

The Secured NCDs have been rated as CRISIL AAA/Stable by CRISIL and IND AAA/Stable by Ind Ratings which indicate the highest degree of safety regarding timely servicing of financial obligation and lowest credit risk.

What is the security cover of these Secured NCDs?

These NCDs shall be secured by a

(i) first and pari passu charge by way of hypothecation on

(a) all the right, title, interest, benefits, claims and demands whatsoever of the Issuer in, to and under all the loans and advances extended by the Issuer to the HoldCo and to the SPVs and all its subsidiaries and associate companies (direct or indirect), present and future (collectively, the “Issuer Loans”)

(b) the right, title and interest and benefits of the Issuer in, to and under all the financing agreements, deeds, documents and agreements or any other instruments (both present and future) which are now executed or may hereafter be executed by the Issuer with respect to the Issuer Loans,

(c) all accounts of the Issuer, including but not limited to the escrow accounts but excluding the Excluded Accounts*; and

(d) all receivables; and

(ii) first and pari passu pledge over at least 99% of the fully paid up equity share capital of JTCL, MTL, RTCL, PKTCL, NRSS, JKTPL and IGL1 and at least 73% of the paid up equity share capital of PTCL. The Issuer may provide higher pledge also as an additional security with intimation to the Security Trustee. It is clarified that by virtue of pledge creation of IGL1, IndiGrid lenders would not have any direct recourse or rights against the subsidiaries of IGL1. For further details on date of creation of security/likely date of creation of security, minimum security cover etc., please refer to the “General Terms of the Issue – Security” on page 46 of the Tranche 1 Prospectus.

When these NCD bonds would be listed on stock exchanges?

The NCDs are proposed to be listed on BSE. The NCDs shall be listed within 6 working days from the date of the issue closure.

How is the company doing in terms of profits?

Its consolidated profits are as below:

Year ended Mar-2018 – Rs 2,103.5 Crores

Year ended Mar-2019 – Rs 1,539.1 Crores

Year ended Mar-2020 – 5,057.2 Crores

Why to invest in India Grid Trust NCD 2021?

1) The company is earning consistent margins in the last few years. This indicates that this company has ability to consistently pay the interest for its creditors or NCD holders.

3) These NCDs offer attractive interest rates where retail investors can get interest up to 8.2%.

4) It issues secured NCDs. Regd secured NCDs in case of any non performance of the company and the company gets closed for some reason, NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company. Hence it is safe to invest in such secured NCD options.

Why not to invest in these bonds?

Here are the risk factors of investing in these bonds.

1) Company may be unable to operate and maintain its power transmission projects to achieve the prescribed availability.

2) Company may lose tariff revenues or fail to receive payments and incur significant repair and replacement costs in event our power transmission projects or proposed solar projects are rendered inoperable due to force majeure events.

3) Majority of company revenues are derived from tariff payments received from LTTcs and delay in payments of PoC charges to the CTU by users and customers may adversely affect our cash flows and results of operations.

4) Any downgrade of company credit ratings may increase its financing costs and subject to more onerous covenants.

5) Refer prospectus for complete risk factors.

Also read: This water based aqua fund generated 15% returns – Should you invest?

Should you invest in India Grid Trust NCD?

India Grid Trust NCD issue in April, 2021 offers high interest rate up to 8.2%. It has a good credit rating of AAA. While these NCDs would get listed on stock exchanges, in case you want to liquidate, you may get lower price. This is the major negative factor. If you are looking for regular income for short to medium term, you can subscribe to these NCDs for 3 and 5 years tenure. One can ignore 7 years and 10 years as we do not know how such companies would perform in the long term.

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Suresh KP

17 comments

  • Jainil

    Hi Sir, Tranche document says as per below for Category 3 and 4, What about amount more than 2 lakhs?

    Category III Investor High net-worth individual investors – resident Indian individuals or Hindu Undivided Families through the Karta applying for an amount aggregating to above ₹ 1,000,000 across all options of NCDs in this Tranche 1 Issue

    Category IV Investor Retail individual investors – resident Indian individuals or Hindu Undivided Families through the Karta applying for an amount aggregating up to and including ₹1,000,000 across all options of NCDs in this Tranche 1 Issue and shall include retail individual investors, who have submitted bid for an amount not more than ₹200,000 in any of the bidding options in the Issue (including Hindu Undivided Families applying through their Karta and does not include NRIs) through UPI Mechanism

    • Amount > 2 Lakhs is HNI category and < 2 Lakhs is Retail category. Both would get same rate of return under category3 & 4. Is there any confusion in this?

      • Jainil

        Hi Suresh Sir,

        If the amount is exactly 2 lakhs then will it fall under retail or HNI?

        And let’s say while applying mistakenly if we select retail and amount is more than 2 lakhs or vice versa select HNI and amount is less than 2 lakhs, what would happen?

        Thanks for the swift response as always

  • Kamal Garg

    (1) India Grid Trust and Power Grid Invit are owned and managed by only one entity, i.e. Power Grid Corporation of India Ltd ?
    (2) While India Grid Trust is issuing NCDs and Power Grid Invit is issuing units?

    • Kamalji, Both companies different.
      PowerGrid InvIT sponser is Power Grid Corporation
      Indigrid InvIT sponsor is Sterlite power transmission + Esoteric ii Pte ltd
      Indigrid InvIT IPO came 3 years back and now Powergrid InvIT IPO has come. Yes, India Grid Trust has come up with NCDs, while PoewrGrid InvIT would issue units.

  • Vikram

    Between the Powergrid InvIT IPO and this NCD, which one would you suggest to invest in?

  • Ann

    Hi, How to buy as a non-Indian investor?

  • raja

    Sir, what is the face value of the bond?

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