In the last one year, the RBI has cut the Repo Rate multiple times during the MPC meetings. As a result, the interest rates on bank fixed deposits and corporate bonds have fallen. Investors have been looking for investment options with higher yields. One of these options includes the infrastructure investment trusts (InvITs), within which the IndiGrid InvIT currently offers a yield of more than 9%. However, it cannot be directly compared to bank fixed deposits or corporate bonds. In this article, we will understand what InvITs are, what the IndiGrid InvIT is, how it has performed, and whether you should invest in it.
What is an InvIT?
An Infrastructure Investment Trust (InvIT) is a Collective Investment Scheme (CIS), similar to a mutual fund. It is registered with SEBI and is regulated by SEBI. An InvIT raises funds from investors and invests them primarily in infrastructure assets. The investors are issued the InvIT units equivalent to their investment.
The InvIT invests its funds in infrastructure assets such as power transmission lines, solar power generation and storage projects, roadways, mobile towers, data centers, optical fiber lines, logistics infrastructure, etc. The income generated by these assets is distributed to investors in the form of distributions, usually quarterly.
Some of the stock exchange-listed InvITs in India include:
- IRB InvIT Fund
- IndiGrid Infrastructure Trust
- Powergrid Infrastructure Investment Trust
The units of the above exchange-listed InvITs can be bought and sold through your trading account by logging in to the broker’s website/mobile App. The units bought are credited to your demat account, and the money is debited from your trading/banking account.
When you sell units, they are debited from your demat account, and the money is credited to your trading/bank account. The profit earned (capital gain) is the difference between the selling price and the buying price of the units. The above-mentioned listed InvITs make quarterly distributions to their unitholders.
SEBI regulations for InvITs
SEBI has laid down various regulations that all InvITs have to comply with. Some of these include:
- An InvIT has to invest and maintain a minimum of 80% of its funds in operational and revenue generating-infrastructure projects
- An InvIT must distribute not less than 90% of its net distributable cash flows to its unitholders periodically
What is IndiGrid InvIT?
The IndiGrid InvIT is India’s first and largest publicly listed InvIT. It owns, operates, and manages power transmission, renewable generation, and energy storage assets across India. It has assets under management (AUM) of more than Rs. 32,800 crores spread across transmission lines, solar generation, battery energy storage, and transformation capacity. It enjoys a strong AAA credit rating.
How has IndiGrid InvIT performed?
IndiGrid InvIT got listed in June 2017, with an issue price of Rs. 100 per unit. Post listing, IndiGrid InvIT announced the first acquisition of its Sponsor assets in October 2017. At that time, the InvIT’s AUM was Rs. 3,800 crores. Since then, over the years, the InvIT has acquired transmission lines, solar generation projects, etc., and grown its AUM by more than 8 times to Rs. 32,800 crores.
Over the years, the acquisitions have been distribution accretive, leading to a rise in Distribution Per Unit (DPU) from Rs. 11 in FY 2018 to Rs. 16 in FY 2026. The current price per unit trades around Rs. 165, which is an absolute gain of 65%.
IndiGrid DPU trend: Last 5 years
Source: IndiGrid Q3 FY 2025-26 investor presentation
For the Financial Year 2025-26, IndiGrid InvIT management has guided for a distribution per unit (DPU) of Rs. 16. So far, it has made 3 quarterly distributions of Rs. 4 each (Rs. 12 in total) and is on track to meet its annual guidance.
As per the InvIT’s quarterly investor presentation, as of February 2026, it has distributed DPU of Rs. 113.32/unit since its listing. Suppose, someone invested at Rs. 100/unit in the IPO and is still holding the units. They have received distributions of Rs. 113.32/unit, which is more than their investment amount in the form of distributions.
Let us look at the overall returns of IndiGrid InvIT.
(Source: IndiGrid Q3 FY 2025-26 investor presentation
The table above shows that IndiGrid InvIT has given a 13% annualised return since its listing, which is a decent return.
Should you invest in IndiGrid InvIT?
Historically, IndiGrid has grown through acquisitions, thereby increasing its AUM. It participates in projects as and when they are available for bidding. In its Q3 FY 2025-26 investor presentation, it mentioned high bidding activity in the transmission and BESS sector with a total project value of the bid pipeline estimated at Rs. 1,57,000 crores. So, IndiGrid’s future growth will depend on the number of projects they acquire, how accretive they are, funding costs, growth in net distributable cash flows (NDCF), distribution per unit (DPU), etc.
The current unit price trades around Rs. 165. The management has guided a DPU of Rs. 16 for FY 2025-26. Based on the current unit price of Rs. 165 and the DPU of Rs. 16, the yield works out to more than 9%, which is decent.
The risks include underperformance of the infrastructure assets owned resulting in lower-than-expected income, an increase in the cost of debt due to rising interest rates, potential delays in the completion of under-construction projects, fall in DPU, stock market volatility leading to higher fluctuations in unit prices, etc.
Whether you should invest in IndiGrid InvIT units will depend on your risk appetite. You must consult your financial advisor, who will assess your risk profile and other factors. Accordingly, the financial advisor will advise whether you should invest and how much percentage of your overall portfolio you should allocate to it. You must always follow asset allocation and diversify your investment portfolio across various asset classes.