2 Undervalued InvIT Stocks Trading Below Fair Value

Infrastructure investment trusts, or InvITs, hold operating road and power transmission assets and are structured to pass through most of their cash flow to unit holders as regular distributions rather than conventional dividends. Not every InvIT in the space trades at the same multiple. A screen of listed InvIT stocks against the sector's average price to earnings ratio surfaces two names still priced below that benchmark.

IRB InvIT Fund and PowerGrid Infrastructure Investment Trust both currently trade below the broader InvIT sector PE, despite posting positive return on equity. This piece breaks down why each trust screens as undervalued, what the underlying financials show, and the risks that come with owning infrastructure investment trusts.

Click Here – Get Free Investment Predictions

Why These InvIT Stocks Screen as Undervalued

The InvIT sector currently carries an average price to earnings ratio of close to 24.7 times trailing earnings for trusts holding road and transmission assets. A trust trading meaningfully below that average, while still posting positive return on equity, is a reasonable starting point for a relative valuation screen.

Both trusts below clear that bar, with PowerGrid InvIT standing out for its notably higher distribution yield, a distinction worth noting among InvIT stocks that otherwise look similarly undervalued on a headline basis.

The table below lists these two trusts alongside their current price, valuation multiple and return ratios.

Trust	NSE Ticker	CMP (Rs)	PE Ratio	Sector PE	ROE	Market Cap (Rs Cr)
IRB InvIT Fund	IRBINVIT	63.36	15.76	24.72	4.14%	5,025
PowerGrid InvIT	PGINVIT	100.01	10.05	24.72	12.09%	9,105

IRB InvIT Fund: Toll Road Asset Portfolio

IRB InvIT Fund holds a portfolio of operating toll road assets across multiple Indian states, earning revenue from toll collections. The stock trades at a price to earnings ratio of 15.76, below the sector average of 24.72, at a current price of around Rs 63.

Return on equity of 4.14 percent is more modest than PowerGrid InvIT, reflecting the accounting treatment typical of InvIT structures, and the debt to equity ratio of 1.15 is the higher of the two. On an EPS of Rs 4.03 and book value of Rs 87.65, the price to book multiple works out to 0.72, the only one of the two trading below its unit book value.

PowerGrid InvIT: Wider Discount, High Distribution Yield

PowerGrid Infrastructure Investment Trust holds a portfolio of operating power transmission assets, earning regulated tariff based revenue. Its price to earnings ratio of 10.05 is the wider discount to the sector average of 24.72 among these two InvIT stocks, at a current unit price of around Rs 100.

Return on equity of 12.09 percent is meaningfully higher than IRB InvIT Fund, and the debt to equity ratio of 0.14 is far lower. On an EPS of Rs 9.96 and book value of Rs 90.32, the price to book multiple works out to 1.11, alongside a distribution yield of close to 12 percent.

Valuation Snapshot: PE, PB and Distribution Yield

Beyond the headline price to earnings ratio, book value multiples and distribution yield matter more for InvITs than conventional dividend yield, since these trusts are structured to distribute the bulk of their cash flow to unit holders on a regular basis. This structural feature explains why the yields on both trusts look considerably higher than typical equity dividend yields.

Trust	Price to Book	Book Value (Rs)	Distribution Yield	Debt to Equity
IRB InvIT Fund	0.72	87.65	0.00%	1.15
PowerGrid InvIT	1.11	90.32	11.99%	0.14

PowerGrid InvIT pays a substantially higher distribution yield alongside much lower leverage, making it the more conservatively financed of the two trusts on a relative basis. IRB InvIT Fund trades below its own unit book value, reflecting its higher debt load and softer return on equity.

Check Live PE, PB and ROE Data on the Univest Screener

Risks to Consider Before Buying These InvIT Stocks

A discount to the sector average price to earnings ratio does not remove structural or asset specific risk in infrastructure investment trusts, and InvIT stocks in general carry considerations distinct from ordinary equity shares.

Traffic and Toll Revenue Risk for IRB InvIT Fund

IRB InvIT Fund's revenue depends on toll road traffic volumes, which can be affected by economic slowdowns, alternate route competition or regulatory changes to toll rates.

Regulated Tariff Risk for PowerGrid InvIT

PowerGrid InvIT's revenue is linked to regulated transmission tariffs, and any adverse changes in tariff orders or renewal terms can affect future distributions.

Interest Rate Sensitivity

InvIT unit prices tend to be sensitive to interest rate movements, since their high distribution yields are often compared against prevailing bond yields by investors.

Limited Growth Beyond Asset Acquisitions

Since InvITs distribute most of their cash flow, future growth depends largely on acquiring new assets rather than organic reinvestment, making growth visibility dependent on sponsor pipeline and acquisition funding.

How to Track These InvIT Stocks

Investors evaluating these two InvIT stocks should track quarterly distribution payouts, underlying asset traffic or tariff trends, and how the sector average PE moves relative to each trust's own multiple over time, rather than relying on the valuation gap in isolation. Comparing these numbers regularly is the most reliable way to judge whether the discount to fair value remains intact or has already closed.

Download the Univest iOS App or Univest Android App to track IRB InvIT Fund and PowerGrid InvIT unit prices live and set price alerts.

Conclusion

IRB InvIT Fund and PowerGrid Infrastructure Investment Trust are the two InvIT stocks currently trading below the sector's average price to earnings ratio of close to 24.7 times, while both maintain positive return on equity. That combination, alongside high distribution yields, makes them worth a closer look for investors who already want exposure to India's toll road and power transmission infrastructure theme, though traffic and tariff risk mean position sizing and diversification still matter when adding these names to a portfolio.

FAQs on Undervalued InvIT Stocks

Which InvIT stocks are trading below the sector average PE?

Ans. IRB InvIT Fund and PowerGrid Infrastructure Investment Trust are currently trading below the InvIT sector's average price to earnings ratio of close to 24.7 times, based on live NSE and BSE pricing.

Is PowerGrid InvIT undervalued compared to its sector?

Ans. PowerGrid InvIT trades at a price to earnings ratio of 10.05, the wider discount to the sector average of 24.72 among these two names, while delivering a return on equity of 12.09 percent.

Why do InvITs pay a distribution yield instead of a dividend yield?

Ans. InvITs are structured to pass through most of their operating cash flow to unit holders as regular distributions, which is why yields like PowerGrid InvIT's close to 12 percent are structurally higher than typical equity dividend yields.

What is the market capitalisation of PowerGrid InvIT?

Ans. PowerGrid Infrastructure Investment Trust has a market capitalisation of around Rs 9,105 crore, with a price to earnings ratio of 10.05 against the sector average of 24.72.

Which of these InvIT stocks carries more debt?

Ans. IRB InvIT Fund carries a higher debt to equity ratio of 1.15 compared with PowerGrid InvIT's 0.14, reflecting the more leveraged nature of its toll road asset portfolio.

What are the main risks in undervalued InvIT stocks?

Ans. The main risks include traffic and toll revenue variability for road assets, regulated tariff risk for transmission assets, interest rate sensitivity, and limited organic growth beyond new asset acquisitions.

Is a low PE enough reason to buy an InvIT stock?

Ans. A price to earnings ratio below the sector average is a useful starting screen for InvIT stocks but not a standalone buy signal. Investors should also review the quality of underlying assets, distribution consistency and leverage before investing.