PowerGrid plans to raise Rs 2k cr via masala bonds

By: | Published: May 31, 2018 4:31 AM

The state-owned entity is planning a capex of Rs 25,000 crore for FY19, of which 70% will be raised through either loans or bonds

PowerGrid, Masala bonds, HDFC Bank, MTN, Masala bond market, EBITDAOne of the issues with these offshore Rupee-denominated bonds is the withholding tax which adds to the overall cost.

PowerGrid is planning to hit the Masala bond market to raise between Rs 2,000 crore and Rs 3,000 crore in fiscal year 2019, director-finance K Sreekant told reporters on the sidelines of a press meet on Wednesday. Masala bonds are rupee-denominated bonds issued in the overseas market. The state-owned entity is planning a capex of Rs 25,000 crore for FY19, of which 70% will be raised through either loans or bonds, the management said. The rest of the amount is to be raised via internal accruals. Power Grid already has a $1 billion medium term note (MTN) programme in place. The company executives indicated that they are keeping a close eye on the markets for a possible window of opportunity to come out with the masala bond issuance.

“As of now, market conditions are not very conducive. We cannot give an exact period as to when we will hit the market, but we are observing. We have an MTN in place,” Sreekant said. It has been a while since a major Masala bond issuance has taken place. The last major issue was done by HDFC Bank which had priced its seven-year masala bonds at 8.1% to raise $350 million.

One of the issues with these offshore Rupee-denominated bonds is the withholding tax which adds to the overall cost.
For example, for a masala bond yielding 8%, the withholding tax is likely to add another 40 bps to the cost, according to investment bankers.

Power Grid posted a 4.6% rise in its Q4FY19 standalone net profit at Rs 2,004.68 crore. Net revenues saw a growth of 16.49% at Rs 7,811.32 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at Rs 6,524.08 crore with an EBITDA margin of 83.52%.

For the full year, the company posted a 10% rise in its net profit at Rs 8,239 crore on a total income of Rs 30,766 crore. Power Grid capitalised assets worth Rs 27,370 crore and incurred a capital expenditure to the tune of Rs 25,791 crore during FY18. As at the end of FY18, it is operating about 1.48 lakh ckt kms of transmission lines along with 236 sub-stations with transformation capacity of more than 3.32 lakh MVA.

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