Highlights
| Issue Size –: 250,000,000 shares | Issue Open/Close – 28 Feb / 01 March, 2024 |
| Price Band (Rs.) 98 – 100 | Issue Size (Rs.) – 25,000 mn |
| Face Value (Rs) – | Lot Size (shares) 150 |
GR Infraprojects Limited (GRIL) set up Bharat Highways InvIT (the Trust) as an irrevocable trust under the Indian Trust Act, 1882 pursuant to the Trust Deed dated 16 June 2022 as its Sponsor. The Trust has been settled for an initial sum of Rs. 10,000. The Trust has been registered as an Infrastructure Investment Trust (InvIT) with SEBI.
The Trustee to the Trust is IDBI Trusteeship Services Limited (the Trustee), Investment manager for the Trust is GR Highways Investment Manager Private Limited (the Investment Manager). The object and purpose of the Trust is to raise funds through the Trust, to make investments in accordance with the InvIT Regulations and the investment strategy and to carry on the activities as may be required for operating the Trust, including incidental and ancillary matters thereto.
It is an infrastructure investment trust established to acquire, manage and invest in a portfolio of infrastructure assets in India and to carry on the activities of an infrastructure investment trust, as permissible under the SEBI InvIT Regulations.
The Sponsor is engaged in testing services in the field of transportation engineering and has expertise in NSV survey, FWD survey, pavement design of roads and airports, physical and chemical testing of soil, lime, cement, road roughness testing, concrete and bituminous mix design of road projects.
Out of the total proceeds of Rs. 25,000 mn, a certain amount of money would go towards providing loans to the project SPVs for repayment/ pre-payment, in part or in full, of their respective outstanding loans (including any accrued interest and prepayment penalty) as the Investment Manager believes that the pre-payment or scheduled repayment of the loans availed by the Project SPVs will (i) help to reduce the outstanding indebtedness of the InvIT, on a consolidated basis and (ii) assist the InvIT in maintaining a favorable debt-equity ratio, which will enable the InvIT to raise further resources in the future to fund potential business development opportunities and plans to grow and expand its business in the future thereby enabling the InvIT to meet its commitment towards distributions to Unitholders.
Key Highlights
- The Government launched the NIP with a forward-looking approach and with a projected infrastructure investment of around Rs. 111 trillion during FY20 – 2025. The NIP currently has 8,964 projects with a total investment of more than Rs. 108 trillion under different stages of implementation. Out of the total capital outlay under the NIP, 55 pct is 140 under implementation, 16 pct is at a conceptual stage and 29 pct is in the development stage. Sectors such as commercial infrastructure, energy, social infrastructure and transport amount to 4.6 pct, 20.4 pct, 13.9 pct and 43.5 pct respectively out of the total capital outlay.
- All of the InvIT Assets are HAM projects awarded by NHAI and the revenue stream is primarily through annuity payments from the NHAI. GRIL is monetizing future annuity payments (including interest payable thereon) and O&M income receivable from the NHAI by transferring the InvIT Assets to the InvIT.
- They will own an initial portfolio consisting of seven InvIT Assets having an aggregate length of approximately 497.292 km located on national networks across five states in India. The projects are located on national highway networks that experience both commercial and passenger vehicular traffic.
- Through the proposed ROFO Agreement, they will have a right of first offer to acquire certain assets of GRIL, their proposed significant Unitholder and the current majority shareholder of the Project SPVs, including the projects currently owned by GRIL or which may be acquired or developed by GRIL or its existing or future subsidiaries. They believe that this access to future road assets of GRIL or its existing or future subsidiaries will be an important source of the InvIT’s growth in the future.
Key Risk
- All of its revenue comes from its InvIT Assets is dependent on receiving consistent annuity income from NHAI.
- They may be subject to increases in costs, including O&M costs, which they cannot recover by increasing annuity income under the relevant Concession Agreement.
- The Project SPVs’ financing agreements entail interest at floating rates, and any increases in interest rates may adversely affect the results of operations, financial condition and cash flows.
Summary Special Purpose Combined Statement of Profit and Loss
| Particulars (Rs. mn) | FY21 | FY22 | FY23 | H1FY24 |
| Income | ||||
| (a) Revenue from operations | 21,539.65 | 15,857.02 | 15,094.87 | 3,680.65 |
| (b) Interest on deposits with banks | 36.59 | 104.76 | 225.80 | 173.91 |
| (c) Interest from vendor advance and IT refund | 124.67 | 40.02 | 225.80 | 19.94 |
| (d) Other income | 3.02 | – | 19.24 | 10.90 |
| Total income (I) | 21,703.93 | 16,001.80 | 15,374.70 | 3,885.40 |
| Expenses | ||||
| (a) Sub – contractor charges | 16,365.78 | 11,381.55 | 4,118.72 | 372.76 |
| (b) Employee benefits expense | 4.58 | 3.92 | 3.77 | 2.05 |
| (c) Finance costs | 2,648.58 | 3,440.87 | 3,758.55 | 2,007.86 |
| (d) Other expenses | 341.77 | 332.27 | 283.82 | 147.00 |
| Total expenses (II) | 19,360.71 | 15,158.61 | 8,164.86 | 2,529.67 |
| Profit before tax (III)= (I-II) | 2,343.22 | 843.19 | 7,209.84 | 1,355.73 |
| Tax expense: | ||||
| (a) Current tax | – | 1.84 | 208.22 | 304.27 |
| (b) Adjustment of tax related to earlier year (net) | -202.75 | – | – | – |
| (c) Deferred tax charges | 1,051.51 | 212.67 | 1,731.15 | 37.93 |
| Total tax expenses (IV) | 848.76 | 214.51 | 1,939.37 | 342.20 |
| Net profit for the period/year (V)= (III-IV) | 1,494.46 | 628.68 | 5,270.47 | 1,013.53 |
Valuation
At the upper end of the price band, the current P/B ratio of ~0.8x is based on book value as of September 2023, considering the bright prospects ahead, one may Subscribe from a longer-term perspective.
Also read: What Is Asset Allocation And Why Is It Important?
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