Best Infrastructure Investment Trusts (InvITs) in India: Returns, Risks & Top Picks

Introduction

Infrastructure Investment Trusts are investment vehicles in India that pool money from investors to own, operate, and manage income-generating infrastructure assets such as roads, highways, power transmission lines, pipelines, etc.

Investors benefit from InvITs because the revenue earned from these assets, such as toll collections from roads or usage charges from power lines, is distributed back to them in the form of regular dividends, and /or interest. The investor could also earn capital gains if the unit price goes up.

When you invest in an InvIT, you don’t directly own a piece of the road, power line, or pipeline , instead, you own units of the trust.

Just like in a mutual fund, investors pool money and a fund manager invests it in stocks/bonds. In InvITs, investors pool money, but instead of buying stocks/bonds, the InvIT manager invests that money in big infrastructure projects like highways, roads, power lines, gas pipelines, etc.

Those projects earn money (like toll fees from roads or charges for using power lines), and that income is shared with us — usually every few months.

InvITs work similarly to REITs (Real Estate Investment Trusts), but instead of real estate, they focus on infrastructure.

Key SEBI Regulations You Should Know Before Investing in InvITs

1. Distribution Requirement - InvITs must distribute at least 90% of the net distributable cash flows to unit holders at least twice a year.

2. Leverage Limits - Aggregate consolidated borrowings cannot exceed 49% of the InvIT’s asset value (unless unit holders approve higher debt with additional conditions).

3. Minimum Public Float - At least 25% of total units must be offered to the public in an IPO.

4. Investment Restrictions - At least 80% of the value of the InvIT’s assets must be invested in completed and revenue-generating infrastructure projects. Up to 20% can be invested in under-construction projects, listed/unlisted debt, or other permissible investments.

5. Valuation - InvIT assets must be valued by an independent valuer at least twice a year, and the valuation report must be disclosed.

6. Related Party Transactions - Any transactions with related parties require unit holders’ approval and must follow fair market value principles.

7. Sponsor’s Holding Lock-in - Sponsors must hold at least 15% of total units for a minimum of 3 years from the date of listing.

Top InvITs in India

1. IRB InvIT Fund is India’s first listed Infrastructure Investment Trust (InvIT), launched via its inaugural IPO in May 2017. IRB InvIT Fund manages a diversified portfolio of major toll-road assets across India, structured through Special Purpose Vehicles (SPVs). Its current project lineup includes six operational road assets across states like Maharashtra, Gujarat, Rajasthan, Karnataka, Tamil Nadu, and Punjab.

2. IndiGrid Infrastructure Trust, India’s Second InvIT but first InvIT in the power sector, owns and operates a diversified portfolio of energy infrastructure assets across the country. Its portfolio includes around 49 transmission lines spanning approximately 8,700 circuit kilometers and 15 substations with a transformation capacity exceeding 22,500 MVA, forming a vital part of India’s interstate and intrastate power networks. IndiGrid has also expanded into renewable energy and  Battery Energy Storage Systems (BESS).

3. PowerGrid Infrastructure Investment Trust (PGInvIT), India’s public sector power-sector InvIT, focuses on owning, operating, and managing electricity transmission assets. Sponsored by Power Grid and SEBI-registered in January 2021, it initially acquired five operational transmission SPVs—namely Vizag, Kala Amb, Parli, Warora, and Jabalpur. PGInvIT stands out for its low-risk, stable cash flow model, backed by long-term tariff-based contracts and consistently high availability above 99%, reinforcing its position as a reliable infrastructure investment

4. Indus Infra Trust (formerly Bharat Highways InvIT) manages a focused portfolio of eight road projects across India, all structured under the Hybrid Annuity Model (HAM) and operating under concession agreements with the National Highways Authority of India (NHAI). These assets span approximately 2,481 lane-kilometers in states such as Punjab, Gujarat, Andhra Pradesh, Maharashtra, and Uttar Pradesh. The HAM structure ensures minimal construction risk and predictable long-term cash flows, supported by a financially sound, AAA-rated counterparty and a geographically diversified mix of toll-road assets.

5. Capital Infra Trust, previously known as National Infrastructure Trust, went public via its IPO in January 2025, specializing in acquiring and managing infrastructure assets, primarily national highways, via a portfolio of Special Purpose Vehicles (SPVs). These assets are mostly executed under the Hybrid Annuity Model (HAM) in partnership with NHAI. As of late 2024, the trust’s sponsor, Gawar Construction Limited, had a pipeline of 26 HAM road projects—11 completed (which include the assets initially acquired by the InvIT) and 15 under construction

Performance of InvITs Since Listing

Methodology

1. InvIT Selection: Identified all listed Infrastructure Investment Trusts (InvITs) on the National Stock Exchange (NSE):

   ∙ IRB InvIT Fund

   ∙ IndiGrid Infrastructure Trust

   ∙ PowerGrid Infrastructure Investment Trust

   ∙ Indus Infra Trust

   ∙ Capital Infra Trust

   
   

2. IPO Details: Collected IPO price, listing date, and other offering details from the Capitaline database.

   
   

3. Price and Return Data: Used stock price history to calculate CAGR (price return) from the IPO date to July 2025.

   
   

4. Risk Calculation: Calculated using the standard deviation of returns.

   
   

5. Dividend and Financial Data: Sourced dividend history and financial data from each InvIT’s Annual Reports and Capitaline.

   
   

6. Total Return Computation: Computed total return as:

   Total Return=Price CAGR + Average Dividend Yield

   
   

7. Objective: To analyze and compare the risk–return profile of each InvIT to understand their performance and volatility.

   
   

   Performance Analysis of InvITs in India

   
   

   

IRB InvIT

• Capital depreciation: IRB InvIT has seen an annualized 5.92% fall in unit price due to high payouts that include a significant portion of return of capital.

• Finite asset life: Its toll-road concessions have a limited operating period, reducing long-term growth potential.

• Interest rate impact: Higher interest rates have made alternative investments more attractive, putting pressure on unit prices.

• Dividend yield: Average dividend yield stands at 16.94%, as large cash distributions form the bulk of investor returns.

• Traffic & toll uncertainty: There is ongoing uncertainty about traffic growth and toll collections.

• Capital drift: Without adding new projects, the unit price naturally trends lower over time despite strong cash income.

IndiGrid Infrastructure Trust 

• Capital appreciation: IndiGrid Infrastructure Trust has seen an annualized 5.73% rise in unit price due to stable, regulated power transmission assets and long-term contracts.

• Portfolio growth: Steady expansion into renewable energy and battery storage supports future cash flows.

• Dividend yield: Average dividend yield is 10.03%, reflecting consistent and sustainable payouts backed by predictable revenues.

• Total return: Stands at 15.76%, combining moderate capital growth with reliable income.

• Low volatility: Standard deviation of 10.89% is due to minimal demand risk, long concession periods, and regulated tariff structures that stabilize cash flows and unit prices.

PowerGrid Infrastructure Investment Trust

• Capital depreciation: PowerGrid Infrastructure Investment Trust has seen an annualized 3.02% fall in unit price due to moderate market re-pricing, rising interest rates, and limited recent portfolio expansion.

• Dividend yield: Average dividend yield is 12.13%, with most returns coming from steady cash flows of regulated transmission assets.

• Total return: Stands at 9.11%, where income outweighs the modest capital loss.

• Volatility: Standard deviation of 12.62% reflects that, while assets are low-risk with long-term tariff agreements, the unit price still responds to interest rate changes, sector sentiment, and refinancing factors.

Capital Infra Trust

• Capital depreciation: Capital Infra Trust has seen an annualized 32.36% drop in unit price since listing due to weak post-IPO market sentiment, limited operating history, and investor caution toward its road assets despite the Hybrid Annuity Model’s fixed-payment structure.

• Dividend yield: Average dividend yield is a very high 29.46%, driven by large distributions aimed at attracting investors and returning initial cash flows.

• Total return: Stands at –2.90%, as the high yield could not offset the steep capital loss.

• Volatility: Standard deviation of 25.58% reflects high price swings typical of a new listing, influenced by low trading history, early price discovery, and broader interest rate and infrastructure sector sentiment.

Who Should Invest in InvITs?

InvITs are best suited for investors who want regular income with relatively lower risk than equities, but are okay with limited capital appreciation.

Here’s who might find them attractive:

1. Income-focused investors

• Retirees or people wanting steady cash flow — InvITs must distribute at least 90% of their net distributable income to unitholders, often quarterly.

• Dividend yields (post-tax in some cases) can be 7–12%, sometimes higher for certain InvITs.

2. Conservative equity investors

• People who want exposure to infrastructure as an asset class without taking on construction risk or the volatility of pure infra company stocks.

• InvITs own operational projects with stable contracts, so earnings are more predictable.

3. Diversifiers

• Investors are looking to diversify portfolios beyond stocks and bonds.

• InvIT returns are often less correlated with equity markets, especially if assets are under-regulated or annuity models.

4. Long-term passive investors

• Those who are comfortable with limited price growth but consistent distributions over many years.

• Capital appreciation may be modest because the assets have finite lives, and high payouts reduce NAV over time.

Who Should Avoid Investing in InvITs?

• Short-term traders (prices don’t swing like growth stocks, except for liquidity shocks).

• Investors who need rapid capital growth (InvITs are income-first, growth-second).

• People are uncomfortable with interest rate risk —(Yields become less attractive when bond rates rise, which can pull prices down).

Conclusion:

InvITs can be an effective way to access infrastructure as an asset class while earning predictable cash flows, but they also come with nuances like interest rate sensitivity, finite asset life, and varying sector risks. Evaluating these factors against your portfolio goals requires more than just looking at headline yields. An experienced investment advisor can help you assess the quality of the underlying assets, the sustainability of payouts, and how such investments fit within your overall asset allocation and tax strategy, ensuring decisions are grounded in both opportunity and risk awareness.