IRB INVIT TRUST- new game in the town!

Q3FY23 Con call, Key highlights:

1. Jan 2023 traffic decline is normal due to lower car trafffic following holiday season. There is nothing unusal in traffic
2. FY24 distribution would be around 8 per unit (Rs 2 per quarter) Maximum amount would be in form of Interest. During FY22, the two major project were near completition of concession, which resulted in larger share of principal, which is not case in FY23. Hence, distribution is mainly coming from interest flow and same shall continue
3. Management view about represenation to Min of Finance of application of income tax on capital redemption is as under. The investor shall be allowed adjust repayment of capital against acquistion cost and after appropriation of total acquisition cost, balance amount shall be taxed. The meeting of Representative body of InvIT and REIT has not held as most of REIT/InvIT were busy with quarterly results. Same is expected to organise in shortly as most have now completeed their quarterly reason.
4. Vadodara Kim would be contributing Paise 30-40 per unit in FY24. The final distribution would be subject to movement in interest.
5. WPI for DEcember 2022 was around 4.95% provisionally. In case same remain in final esitmate for WPI in Dec 2022, during FY24, InvIT shall expect toll hike of around 5%, (3% fixed+40% WPI (~5% in December), giving the toll revision rate,
6. Pathankot toll closure would result in increase in concession agreement by 30 days and cash compensation of Rs 6-7 Cr for closure of toll collection, InvIT has filed arbitration for same expect award within period 12-18 months period.
7. Amravati Talegaon, traffic continue to adversely afffect due to Metro work. However, now traffic shall improve as most of work is complete (Not sure on the second statement)
8. FY24 total repayment would be Rs 105-110 Cr (55-60 Cr for Vadodara HAM Assets and balance for old assets).
9. Exploring to add one more HAM assets from third party. Still at early state. InvIT can raise further Rs 6,000 Cr from debt.
10. Approached SEBI for buyback of units However, since nearly 90% of NCDF is distributed as distribution, SEBI sought source for funding buyback. SEBI was also against allowing NCDF for buyback as same would result in many investors missing out of buyback due to small amount. Hence, in my view, very difficult to anticipate management to do buyback to reduce discount between fair value and market value.

Disclosure: My view may be biased due to my holding in IRB InvIT and also IndiaGrid InvIT/Embassy REIT. Not recommeding any investment action. I am not SEBI registered advisor. I may take investment decision to buy/sell without informing forum. No trade in last 90 days.