InvIT Valuation Services

By CA V. Viswanathan — FCA, ACS, CFE, IBBI Registered Valuer (IBBI/RV/03/2019/12333). Updated for FY 2025-26.

Infrastructure Investment Trusts (InvITs) hold long-life infrastructure assets — toll roads, power transmission lines, gas pipelines, telecom towers, renewable energy projects — and distribute cash flows to unit-holders. SEBI (InvIT) Regulations 2014 mandate independent valuation at minimum half-yearly intervals by an IBBI Registered Valuer. InvIT valuations are particularly complex because they involve regulatory cash flows, concession agreements, residual value beyond the concession period, and currency-rate sensitivities.

InvIT Regulatory Framework

SEBI (InvIT) Regulations 2014 require: (a) at least 80% of value in completed and revenue-generating infrastructure assets; (b) minimum 90% distribution of net distributable cash flow semi-annually; (c) independent valuation half-yearly; (d) full physical inspection annually; (e) detailed disclosure of valuation assumptions and sensitivity. The valuer must be IBBI-registered and independent of sponsor, manager, trustee, and auditor.

Valuation Methodology — DCF Dominates

Unlike REITs (where direct cap rate often suffices), InvIT assets have finite-life cash flows tied to concession periods (typically 20-30 years for toll roads, 25-35 years for transmission, 25 years for renewable) followed by residual value. DCF is the dominant methodology, applied separately for each asset with: (a) project-specific cash-flow forecast over the concession life; (b) discount rate reflecting asset-class WACC (typically 9.5%-12.5% for transmission, 10.5%-14% for toll, 10%-13% for renewable); (c) terminal value (often nil for BOT-type assets, residual for assets with renewal rights); (d) tax shield modelling per applicable tax holiday and Section 80-IA benefits; (e) sensitivity to traffic/generation/throughput, tariff/toll rate, opex inflation.

Asset-Class Specifics

(a) Toll roads — traffic-volume forecasts, toll rate escalation per concession agreement, O&M cost, periodic major maintenance reserve, traffic-risk allocation in concession; (b) Power transmission — fixed regulated tariff under Tariff Period (5 years) + RoE on equity, deemed availability mechanism, return on equity at 15.5% (CERC-notified), MAT sensitivity; (c) Gas pipelines — committed throughput, transmission tariff per PNGRB, capacity utilisation, customer-credit risk; (d) Telecom towers — tenancy ratio, MSA renewal economics, energy pass-through; (e) Renewable — long-term PPAs, generation forecast (P50/P75/P90), tariff structures, applicable GBI/AD benefits.

Independence and Rotation

Same as REITs: IBBI Registered Valuer, independent of sponsor/manager/trustee/auditor for the year preceding appointment, maximum 4-year tenure with rotation. For sponsor-asset acquisitions (very common in InvIT growth — typical sponsor injects new operational assets every 1-2 years), two independent valuations required, with acquisition price not exceeding the lower valuation, and unit-holder approval for material RPTs.

Disclosure to Unit-Holders

Half-yearly NAV statement: per-asset valuation, methodology, key assumptions (discount rate, traffic growth, tariff escalation), sensitivity table. Annual report: full valuation report by independent valuer, statement of independence, methodology rationale, year-on-year change explanation. Material change (>5% NAV impact from revaluation) triggers immediate intimation to SEBI and unit-holders.

Engagement Process and Fees

Process: Phase 1 — Concession review and asset inventory (week 1-2); Phase 2 — Cash-flow modelling per asset (week 3-5); Phase 3 — DCF assumptions and sensitivity (week 6-7); Phase 4 — Independent review and report (week 8-9). Fees: typical InvIT with 5-15 assets — ₹15-60 lakhs per cycle. Larger portfolios: ₹50 lakh-1.5 crore per cycle. Annual engagement covers 2 cycles plus ad-hoc sponsor-asset valuations. Free scoping call available.

How Virtual Auditor Delivers This

Virtual Auditor's CA-CS-IBBI Valuer team handles invit valuation services as an integrated engagement — no hand-offs between firms, single point of accountability, fixed-fee transparency. CA V. Viswanathan (FCA, ACS, CFE, IBBI RV) personally reviews every engagement deliverable. Offices in Chennai, Bangalore, and Mumbai serve clients across India. Free 30-minute scoping consultation available — no obligation.

Get Started — Free Consultation

Call +91 99622 60333 or email support@virtualauditor.in to schedule a free 30-minute consultation with CA V. Viswanathan. No obligation. We will give you a clear scope, timeline, and fixed-fee quote within 24 hours of the call.