Since the start of the calendar year, the Reserve Bank of India (RBI) has cut interest rates by 100 basis points. It has led to a fall in interest rates on fixed-income products like bank fixed deposits. As a result, investors have been exploring alternatives in the search for higher returns. During the same period, the share prices of listed REITs and InvITs have rallied in the 5 to 15% range. With interest rates falling, the demand for these REITs and InvITs has gone up as they offer decent yields with the potential for capital appreciation.
One such InvIT is IndiGrid Infrastructure Trust, which is offering a more than 10% yield. In this article, we will understand what InvITs are, the SEBI guidelines, how the IndiGrid InvIT has performed, and whether you should invest.
Current interest rate scenario
In February 2025, the RBI cut the Repo Rate by 0.25% to 6.25% after holding it steady for 2 years. The RBI further cut the Repo Rate by another 0.25% in April and another 0.50% in June. So far, till August, the RBI has cut the Repo Rate by 1% or 100 basis points. As a result, banks have reduced the interest rates on their fixed deposits by around 1%.
During the August 2025 MPC meeting, the RBI revised the CPI inflation projection to 3.1%, far lower than the earlier 3.7% projection in June. As the CPI inflation is expected to be lower than the target of 4%, experts expect the RBI to cut interest rates further in the coming months. The quantum and timing of interest rate cuts will depend on the incoming economic and inflation data.
If and when the RBI cuts interest rates further, banks are also expected to cut the interest rates on their fixed deposits. The lower interest rates can further reduce the appeal of bank fixed deposits. In such a scenario, should you look at an InvIT like IndiGrid Infrastructure Trust (InvIT) for its high yield? Let us discuss.
What are InvITs?
An Infrastructure Investment Trust is a Collective Investment Scheme (CIS), similar to a mutual fund. An InvIT pools money from investors and is SEBI-regulated. The money is invested in operational and revenue-generating infrastructure projects like highways, power transmission lines, warehouses, telecom towers, pipelines, etc. The income earned from these investments is shared with investors through regular distributions. An Investment Manager manages the trust.
The InvIT can be listed or unlisted. Currently, some of the listed InvITs in India include:
- IndiGrid Infrastructure Trust
- Powergrid Infrastructure Investment Trust
- IRB Infrastructure Developers Limited
- Indus Infra Trust
How do InvITs work?
As per SEBI Regulations, a public InvIT must invest at least 80% of its money in completed and revenue-generating infrastructure projects. The remaining 20% money can be invested in under-construction infrastructure projects or other avenues as per SEBI Regulations. The regulations significantly reduce the execution risks that under-construction infrastructure projects may carry.
The net borrowing for an InvIT is capped at 70% of its Assets Under Management (AUM). It ensures the InvIT doesn’t take too much leverage. The InvIT must mandatorily distribute 90% of the net distributable cash flow (NDCF) to its unitholders. Most listed InvITs make quarterly distributions in the form of Distribution Per Unit (DPU).
So, the SEBI Regulations reduce execution risks, keep leverage in check for InvITs, and ensure regular distributions to unitholders.
How has IndiGrid InvIT performed?
IndiGrid is India’s first and largest publicly listed InvIT. It owns, operates, and manages power transmission, renewable generation, and energy storage assets that deliver power throughout India. IndiGrid’s vision and mission are to become the most admired yield vehicle in India.
It is a AAA-rated company with Rs. 32,437 crores of Assets Under Management (AUM). These assets are spread across transmission lines, transformation capacity, solar generation capacity, and battery energy storage capacity. It operates across 20 States and 2 Union Territories.
IndiGrid InvIT got listed in June 2017 with an issue price of Rs. 100 per share. Over the years, the company has acquired various projects in the power sector and grown its AUM. Since its listing till August 2025, the company has given a Distribution Per Unit (DPU) of Rs. 105.32/unit. So, if someone had invested in the IPO and is still holding the shares, they would have received more money in distributions than they had invested.
The 5-year distribution trend of the company is as follows.
|
Financial year (FY) |
Distribution per unit (DPU) |
|---|---|
|
FY 2022 |
Rs. 12.76 |
|
FY 2023 |
Rs. 13.35 |
|
FY 2024 |
Rs. 14.10 |
|
FY 2025 |
Rs. 15.35 |
|
FY 2026 (Company guidance) |
Rs. 16.00 |
The company makes quarterly distributions and declares them along with the quarterly financial results. For example, for Q1 FY 2025-26, the company declared a DPU of Rs. 4/unit. Since its listing, the company has given a total return of 157% (capital appreciation + DPU), resulting in annualised returns of 12%, which is decent.
How can one invest in IndiGrid?
The IndiGrid units are listed on stock exchanges like the NSE and BSE. An individual can buy IndiGrid units through their trading and demat account just like shares of any other listed company. Suppose an individual has a Zerodha trading account. They can place a buy order from their trading account, and the units will be credited to the demat account. Similarly, when the units are sold, the units are debited from the demat account, and the sale proceeds are credited to the bank account.
Should one invest in IndiGrid?
Over the years, the company has performed well by growing its AUM by acquiring power projects from time to time. For future projects, the company has indicated a high bidding activity in the transmission and BESS sectors. The total project value of the bid pipeline remains strong, which provides scope for the company to keep growing.
For FY 2025-26, the company has guided for a DPU of Rs. 16/unit. The current price per unit is around Rs. 155. It translates into a yield of more than 10%, which is higher than what most bank fixed deposits and many other fixed income instruments currently provide. However, an investor must note that InvITs, REITs like IndiGrid, are hybrid instruments with equity and debt characteristics.
The IndiGrid units trade like equity shares, wherein the unit price moves up or down depending on the company’s financial performance. If the company’s financial performance is good, it can result in capital gain. However, if the financial performance is not good, it can result in capital loss.
Also, the DPU depends on financial performance. If the financial performance is good, the company will continue delivering the same DPU or increase it in the future. However, if the financial performance is not good, the company will have to cut the DPU.
Whether one should invest in IndiGrid or other InvITs/REITs depends on the investor’s investment objective, risk appetite, investment time horizon, and other factors. You must consult a good financial advisor with the requisite qualifications and experience. The financial advisor will assess your risk appetite and other factors and accordingly recommend whether you should invest.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
For all personal finance updates, visit here.
