Ladies and gentlemen, good day, and welcome to India Grid Trust Q2 FY 2025 earnings conference call, hosted by Nuvama Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shubhadeep from Nuvama Institutional Equities. Thank you, and over to you, sir.
Thank you. On behalf of Nuvama Institutional Equities, welcoming you all to the second quarter FY twenty-five results call of India Grid Trust. We are joined today by the top management, represented by Mr. Harsh Shah, CEO and Whole Time Director, Mr. Naveen Sharma, Chief Financial Officer, and Ms. Meghana Pandit, Chief Investment Officer. I would now like to hand over the call to Mr. Harsh Shah for his opening comments, followed by the Q&A. Over to you, Harsh.
Thank you, Shubhadeep, and thank you everyone for joining the quarterly call. Before I begin, I would like to extend my warm regards and wishes for a happy Diwali and a very prosperous New Year to you all. As we have done in the past, we will start with slide 3 to reiterate our vision is going to become the most admired vehicle in Asia, based on focused business model, value accretive growth, predictable distribution, and an optimal capital structure. Based on these pillars, as you see in slide 4, we have showcased consistent growth. As we stand today, our AUM is 29,700 crores.
We are spread across 20 states and 2 UTs, with 83 different revenue-generating elements, with 800 kilometers of lines and 22,550 MVA transformation capacities. Besides this, we have our 1.1 gigawatt peak of solar generation capacity and 400 megawatt hours of BESS projects, which are under deployment in this stage. Coming to this quarter, on slide number 6, the key portfolio updates are being that in line with SEBI's advisory, we have decided to change the name, and for that, the requisite approval will be sought from unit holders.
And SEBI's advisory was with respect to using any name like India, Indian, Bharat, National, et cetera, which, in the case of a company, would have been prohibited by registrar for especially private companies. However, in case of trust, such regulations did not exist in the past. So they wanted to remove this anomaly. And therefore, we are recommending to change our name from India Grid Trust to IndiGrid Infrastructure Trust. The next one is that we have done another 500 megawatt hours of BESS projects in reverse auction process conducted by NTPC Vidyut Vyapar Nigam Limited, NVVN.
With this project, IndiGrid's BESS portfolio will be at 450 megawatt and 900 megawatt hour capacity. We will be looking to execute these projects in the coming couple of years. In this quarter, we also signed and announced a partnership with the British International Investment, BII, Norfund, and Techno Electric, where we are collaborating to develop IndiGrid's three large ISTS transmission projects, which we won during FY 2024. IndiGrid's sponsor, KKR, also successfully conducted an offer for sale process for this quarter, and they have their sale and a liquidity event has enabled marquee investors like L&T, HSBC GAM, SBI Life Insurance, Aditya Birla Mutual Fund, and others, to pick up stake in IndiGrid.
On the back of an overwhelming response from the unitholder, we also concluded a preferential issue done at INR 136.43 a unit for approximately INR 695 crores, and this added long-only investors like Alberta Investment Management, which is a Canadian pension fund, and HDFC Life, among others. Coming to the financial performance for the quarter, FY 2024, and FY 2025 in quarter two, both revenue and EBITDA witnessed 16% and 31% year-on-year growth, respectively, on the back of the acquisitions we had done in the year.
Our AUM and net debt to AUM stand at INR 29,700 crores and approximately 58.7%, respectively, leaving a sizable headroom for us to acquire more projects. Quarter 2 FY 2025 collections at 103% for transmission and 117% for solar assets has also resulted into boosting the NDCF for this half of the year. Quarter 2 DPUs, we maintained at INR 3.75 a unit, and we are on track to deliver the INR 15 guidance for FY 2025, and this will be the highest DPU IndiGrid has ever delivered. The operating performance remained at 98.93% for this quarter, owing to certain trips per PSU in our portfolio, and the solar capacity utilization factor is at 20.4%.
Our operational performance did see a dip on account of seasonal interruptions. Coming to the next slide, on just the industry update, the peak demand has seen a quarter-on-quarter and year-on-year decline on the back of a steady monsoon. Earlier this year, during FY 2025, India witnessed a record high power demand of 155 gigawatt-hours. CEA government authorities would be pretty bullish of overall demand that is going to grow and the amount of capacity growth that it will require. We believe that based on these underlying factors, we will see sizable amount of investment in transmission as well as renewable sector.
Especially the National Energy Plan for Transmission, which we have released, is to enable 600 gigawatts of power by FY 2032. India will need 6.5 lakh kilometers of line, which is an addition of 1.7 lakh circuit kilometers in the next eight years. With several transmission schemes that are becoming under construction and pipeline, the overall visibility for investment opportunity in the sector stands at 9.1 lakh crores till the year 2032. As we can see on slide 8, the immediate bidding pipeline that remains available for players in transmission is approximately 68,500 crores, and we are evaluating these pipeline projects to see how we can ensure that IndiGrid continues to grow.
Coming on slide number 9, on operating platform, operating performance. On the HSE front, this remains zero fatality or long-term lost time injuries and HSE. Our availability, as I mentioned, has been at 98.93%, and solar generation is at 20.4%. Our trips per line is at 0.2, which is still at par with industry. However, our trips per line have increased versus our own benchmarks, as we are seeing unusual monsoon patterns as well as certain trips that has impacted the availability for the quarter. In this quarter, we also received ISO 27001 certification for the solar assets that we had acquired from Virescent. Now, I would like to invite Naveen to take through the financial performance of IndiGrid.
Thank you, Harsh, and good evening, everyone. We are on slide number 10. In Q2 FY 2025, we recorded revenue and EBITDA of INR 806 and INR 733 crores, respectively. That reflects 16% and 31% YY growth. Net distributable cash flow for the quarter was INR 320 crores, and the board has approved a distribution of INR 3.75 per unit, which reflects a 5.6% year over year increase in DPU. For quarterly collections, we achieved 103% for the transmission business and 117% for solar.
Over the trailing twelve months, collection performance at the entity level remained above 100%, with both business segments showing similar strength. The DSO as of September 30 stood at 46 days for transmission and 47 days for solar, marking substantial year-on-year improvement across both segments. Moving to the next slide, number 11. The DPU for the quarter stands at INR 3.75 per unit. This will be distributed as interest, dividend, and other income amounting to INR 3.62, INR 0.11, and INR 0.02, respectively. With outstanding units totaling 83.46 crores as on record date, the gross distribution to all unitholders comes to INR 313 crores.
The record date for the distribution is October 30, and unitholders are expected to receive the distribution by November 9. As of September 30, the NAV per unit was INR 147.5. Following this quarter's distribution, IndiGrid will have distributed INR 93.47 per unit, totaling approximately INR 5,533 crores. On the right, you can see the year-on-year distribution trend, reflecting stable, scalable growth of 6% over the years. Moving on to slide 12. Here we have a waterfall chart detailing the progression from EBITDA to NDCF generation and distribution.
At the SPV level, we recorded a consolidated EBITDA of INR 739 crores. After accounting for finance income, working capital changes, CapEx and taxes at the SPV level, the NDCF generation comes to around INR 780 crores. After adjusting for trust level expenses, finance costs, debt extra, working capital changes, tax and debt repayment, the generated NDCF is INR 320 crores. In Q2 FY 2025, we added INR 7 crore to reserves, bringing the closing reserves to INR 490 crore, which exceeds one quarter's distribution, one quarter DPU basis on current guidance. That's all from my side. I will now hand it over to Meghana to continue with the next slides. Over to you, Meghana.
Thanks, Naveen. Hi, good evening, everyone. I'm on slide number thirteen, which provides a snapshot of the balance sheet. We continue to remain triple A rated by all the three rating agencies, CRISIL, ICRA, and India Ratings. Almost three-fourths of the borrowing book continues to be fixed rate, displaying significant stability. Our average cost of debt on thirtieth September, we ended at around 7.65%, with the net debt to AUM, that is the leverage ratio, at about 58.7%. This number includes the preferential allotment issuance of INR 695 crores, which we closed in the first week of October.
The net debt to AUM on thirtieth September was 61%. Currently, as we speak, it is 58.7%, as you can see. The cash balance was about 1,500 crores, which includes one quarter of distribution plus the debt tranche, which is the amount. Interest cover ratio continues to be very strong at 1.91x. The total gross borrowing is about 19,300 crores, which is split almost equally between NCDs and bank loans and NCDs. All the NCDs and bank loans also are fairly distributed and diversified with all classes of investors, be it mutual funds, banks, retail, HNI, insurance companies, pension funds, and so on.
The repayment schedule that you see at the bottom of the slide showcases refinancing schedule, which is coming up over the next few years. And as we have maintained every single quarter, that we try and ensure that there isn't any bunching up of maturities that takes place. And in any particular year, our refinancing percentage does not cross beyond 12% to 13% of the gross borrowing. So it continues to be a balanced out borrowing profile. Moving on to slide number 14. IndiGrid continues to deliver superior risk-adjusted total returns. Total returns being composite of price change and distribution.
Distribution is about 93% since the time we got listed till thirtieth September, and price change about 44%. So the total return on an absolute basis is about 138%. On an annualized basis, about 13%, which compared with pure play debt indices and equity indices, we display superior returns, especially on a risk-adjusted basis, which is displayed through the beta, which continues to remain very low, very close to zero, that is 0.08. Moving on to slide number 15, on the business outlook, for us. On the portfolio strategy perspective, we continue to focus on ensuring that the operations remain very predictable and stable, as well as we continue to maintain sustainable distribution by focusing on value-accretive acquisitions and the winning opportunities that we are seeing coming up, both on the transmission, solar, and the debt projects.
On the greenfield development, we are focusing on executing the augmentation work which we have received in our existing projects, plus the three new transmission projects, as well as the best projects that we have won, to ensure that we deliver these projects on time. At the same time, we are proactively looking at partnering with the right kind of investors for synergistic greenfield opportunities across transmission and debt. All of that to ensure that we deliver the rupee value guidance of about INR 15 for this fiscal, FY 2025.
Improving balance sheet strength continues to be another very important focus area by ensuring that we keep on optimizing the interest cost and try and elongate the tenure, which matches with our long-term concession agreements. And at the same time, maintain a healthy balance sheet by managing the leverage ratio, and ensuring there is enough headroom for the business growth that we are receiving. Asset management, again, is the third pillar that we are focusing on by looking at maintaining at least 99.5% availability across the portfolio and maximizing the incentives, and at the same time, focusing and building on the digital tools to help us in analytics and proactive decision making.
And at the same time, ensuring that world-class EHS and energy practices get delivered in the portfolio. Industry stewardship or proactively working within the industry, both on the power sector as well as on the invest side, again, remains a very important focus area to ensure that private sector participation continues to improve. For IndiGrid as well as InvITs, there is much more investor awareness that is created. Moving on to slide number 16. This showcases how on the back of value-accretive acquisitions that we have done since the time we got listed, we have kept on increasing the DPU.
The various colors that you see, color codes, are essentially depict the acquisitions that we have done, and on the back of these acquisitions, you can say how the DPU has increased and the longevity of the DPU has also extended over at least nine to 10 years, and that is what this slide depicts. We'll take a pause here and open for questions on the Q2 performance and any other questions in the deck. Over to you, Shubadeep.
Thank you so much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles... Participants, if you wish to ask a question, you may press star and one on your touchtone phone. Ladies and gentlemen, the line from the management has been disconnected.
Just give me a moment, I'll reconnect. We have Mr. Harsh Shah on the line. We have the question from the line of Mr. Shubadeep from Nuvama Institutional Equities. Please go ahead, sir.
My first question, Harsh, is with regards to the large HVDC projects which are on the bidding, and I understand that in one of the projects you have also been bidding. So just wanted to understand that the size and scale of such a large project, how do you see your own capacity to, you know, invest in such a large project, as well as the capability to get into HVDC technology, which is something that you've not executed so far?
Thanks. So Shubadeep, I think, that project that we have bid for is still under bidding. The reverse auction, et cetera, has not yet happened, so it's kind of difficult to comment on that. But I'll tell you, does IndiGrid have the capacity to invest in the project? The answer is yes. And, and as we have already done with our earlier projects, with respect to, partnering with, you know, DFIs and large financial institutions, which ensures that IndiGrid's capital at stake is substantially lesser. So that, that strategy, implemented at a larger scale, certainly enables IndiGrid to participate in such projects. In terms of, capabilities, I think, we have pretty much the team in-house who have executed a sizable amount of projects in transmission in the country. Yes, we have not executed HVDC projects.
Therefore, we would work with, you know, the limited vendors who can work on this, but we would work in support with some vendors who have executed the same technology as well as they have the solution ready. Our strategy over here would be to partner with the right set of financial investors, some of them we've already started, as well as partnering with right set of vendors and global partners who built the gap on the technical know-how, especially on the HVDC side.
Understood. Thanks. Secondly, we're clearly seeing a lot of activity on the BESS side. We've already won a couple of projects. I believe there are a few more in the offing. So are you continuing with the strategy of looking at, you know, BESS-related projects, which are probably synonymous with some of the transmission or the solar projects in terms of the business model? And any risks or any, you know, bonuses that you're sitting, you know, looking at over there with regard to potential further fall in battery prices?
Okay. So I think, yes, we started doing battery almost three years ago with a very small proto, and then last year and this year, we have won many projects. Those projects are in form of execution, and yes, we have gained a little bit because of the battery prices coming down. And I don't know if we can predict the battery price will continue to go down in future, but at least we bid based on what we have currently available, and we would like to, you know, close and execute these projects first. Honestly, having 900 megawatt hours is a significant pipeline.
I would say, I think it is the largest pipeline in the country today, with somebody having that size of battery storage projects. So I think our focus is on execution. And we do think that battery storage is not just a growth area, but also the way the contractual framework is structured is akin to transmission, and we are pretty comfortable with that risk in cash flows. So as long as we are comfortable with the cash flows and the technology, we are pretty bullish on the sector. Yes, and we will... but our primary focus will remain on execution of the current one that we have got already.
Understood. Thanks. That's it from my side.
Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchtone phone. As there are no further questions, I would like to now hand the conference over to management for closing comments.
There is one question.
Yes. We have first question from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Yeah. Yeah, hi, good afternoon, and congratulations on a steady set of numbers. So I had one question regarding the increase in the AUM. So I think now after the prep, we still have a headroom of around INR 12,000 crore, if I'm not wrong, to grow the AUM from maybe 29 to 41 thousand crores. So, I mean, given how we stand and also the limits that we want to put on our solar assets as an overall AUM percentage, what kind of addition are we seeing in this AUM on a yearly basis?
See, I think, historically, we have never commented on the AUM growth. And even right now, it's difficult to comment because we focus on more like value accretive growth, and that sometimes comes, sometimes doesn't come. So it's up to we have to wait for the right set of opportunity. So, I mean, the projects that we have already won will get executed, so that itself will add around INR 3,000 crores of AUM. And that's kind of an assured growth. But the incremental projects as we win and execute a bid for it will be wait and watch. Just one correction, as you mentioned, I don't think the headroom will be INR 12,000 crores, because the number will get added both in denominator and numerator. Our estimate is that up to 8,000 to 9,000 crores is a safer number to assume for headroom for growth.
Understood. And secondly, on your liability side, so, you know, like now, we don't know how the stance of the RBI would be. But given your overall liability profile, because most of it is fixed, you would not necessarily benefit out of a lower sort of an interest rate, going forward, right? I mean, have you done any sensitivity of maybe a 0.5% increase in the repo rates? How much the overall impact to us is?
We haven't done the same analysis because of two reasons. One is, not all the debt is linked to repo rate. It's not immediately transferable rates. There is a velocity which will take place of transmission of rates. We have approximately 77% fixed, so let's say 23% is floating. So directionally speaking, you can add 23% and the effective rates there is. In two years, you'll have about 25 to 30 basis points of immediate impact, and that will translate into on a, whatever, 19,000 crore debt, corresponding addition in the in your DPU. But that's, I think, is too simplistic. So we... But one can do that math.
But we feel that if the rates are substantially down, not just the Repo Rate, in general liquidity spreads and all of it, then it will take about two to three years to really have major impact on transmission of the rates. So probably we can refinance, reprice about 30% to 50% portfolio in two, three years.
Understood. Understood. Thank you, and all the best.
Thank you.
Thank you so much, sir. Participants, if you wish to ask a question, you may press star and one on your touchtone phone. As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you. I think I would not take much time. Just wish you all a very, very happy Diwali, and look forward to the quarterly results for next quarterly result call for next quarter. I hope we are, you know, we have a great experience running individual units, and earn the superior risk-adjusted returns. Thank you.
On behalf of Nuvama Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.