The December quarter results paint a complex picture for this relatively young InvIT, which was registered with SEBI in January 2022. Whilst net sales surged to ₹103.70 crores—a 3.01% sequential increase and 64.13% year-on-year jump—the bottom line remained in the red for the third consecutive quarter. The company's struggle to translate strong operational performance into net profitability stems primarily from a debt-heavy capital structure, with interest expenses consuming ₹42.53 crores during the quarter, up 6.01% from Q2 FY26.
On a nine-month basis for FY26 (April-December 2025), Anzen reported cumulative revenues of ₹314.83 crores, representing a substantial 62.18% growth over the corresponding period last year. However, the InvIT posted a net loss of ₹2.46 crores for the nine-month period, reflecting the persistent challenge of servicing its debt obligations whilst managing depreciation charges on its infrastructure assets.
| Quarter | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 103.70 | 100.67 | 110.46 | 76.80 | 63.18 | 63.21 |
| QoQ Growth | +3.01% | -8.86% | +43.83% | +21.56% | -0.05% | — |
| YoY Growth | +64.13% | +59.26% | +76.37% | — | — | — |
| Operating Margin % | 88.54% | 81.80% | 92.17% | 87.59% | 91.64% | 91.58% |
| Net Profit (₹ Cr) | -3.96 | -8.05 | 9.55 | -7.59 | -3.19 | -3.36 |
| PAT Margin % | -3.92% | -8.23% | 8.91% | -10.25% | -5.22% | -5.49% |
Financial Performance: Revenue Momentum Undermined by Capital Costs
Anzen India Energy Yield Plus Trust's Q3 FY26 financial performance showcases the inherent tension between operational excellence and capital-intensive infrastructure investment. The InvIT generated net sales of ₹103.70 crores during the December quarter, accelerating 3.01% sequentially from ₹100.67 crores in Q2 FY26 and posting an impressive 64.13% year-on-year surge from ₹63.18 crores in Q3 FY25. This sustained revenue expansion reflects growing contributions from the trust's power transmission and renewable energy asset portfolio.
Operating profit before depreciation, interest, and tax (excluding other income) reached ₹89.52 crores in Q3 FY26, translating to a robust operating margin of 88.54%. Whilst this represents a sequential improvement from Q2's 81.80% margin, it marks a decline from the 91.64% margin achieved in the year-ago quarter. The margin compression year-on-year suggests rising operational costs, though the InvIT maintains industry-leading efficiency in its core operations.
However, the path from operating profit to net profit reveals the trust's fundamental challenge. Interest expenses climbed to ₹42.53 crores in Q3 FY26, up 6.01% from ₹40.12 crores in the previous quarter and surging 164.16% from ₹16.10 crores a year earlier. This dramatic increase in finance costs reflects the trust's expanded asset base and corresponding debt obligations. Depreciation charges stood at ₹52.73 crores, relatively stable sequentially but up 22.71% year-on-year, further eroding profitability.
The resulting profit before tax stood at a loss of ₹5.65 crores, which after accounting for a tax credit of ₹1.69 crores (29.91% effective rate), translated to a net loss of ₹3.96 crores. Whilst this represents a 50.81% improvement from Q2 FY26's loss of ₹8.05 crores, it marks a deterioration from the profitable Q1 FY26 when the trust posted net profit of ₹9.55 crores. The quarterly volatility in profitability underscores the sensitivity of InvIT returns to revenue timing and expense phasing.
Capital Structure Concerns: High Leverage Constrains Returns
The fundamental challenge facing Anzen India Energy Yield Plus Trust lies in its capital structure and the resultant impact on return metrics. The InvIT's average return on capital employed (ROCE) stands at a modest 6.72%, whilst its latest ROCE has declined to just 3.30%—reflecting the difficulty in generating adequate returns from capital-intensive infrastructure assets in the current interest rate environment. More concerningly, the trust's return on equity (ROE) averaged 0.0% and currently stands at a negative 0.64%, highlighting the erosion of shareholder value.
The balance sheet as of March 2025 reveals the scale of the trust's debt burden. Long-term debt stood at ₹1,434.06 crores, nearly doubling from ₹744.18 crores a year earlier. This aggressive expansion of the debt load—evidenced by a debt-to-EBITDA ratio of 6.99 times and net debt-to-equity of 1.20 times—places significant pressure on cash flows. The trust's EBIT-to-interest coverage ratio of just 0.62 times indicates that operating profits fall short of covering interest obligations, a concerning metric for fixed-income investors.
Leverage Alert: Debt Servicing Strains Cash Generation
With interest expenses of ₹42.53 crores in Q3 FY26 consuming 41.01% of net sales, Anzen's ability to generate distributable cash flows remains constrained. The trust's EBIT-to-interest coverage of 0.62x signals that current operational profitability is insufficient to service debt obligations without relying on asset sales or additional capital raises. Investors should monitor debt refinancing plans and asset monetisation strategies closely.
Shareholder funds stood at ₹1,550.45 crores as of March 2025, supported by share capital of ₹1,957.16 crores but offset by accumulated losses reflected in negative reserves of ₹406.71 crores. The book value per share of ₹79.22 provides some cushion against the current market price of ₹117.00, though the price-to-book ratio of 1.58 times suggests investors are pricing in future growth prospects despite current losses.
Cash flow dynamics offer a mixed picture. For FY25, the trust generated operating cash flows of ₹240.00 crores, a healthy improvement from ₹163.00 crores in FY24. However, investing activities consumed ₹1,527.00 crores during the year—primarily reflecting asset acquisitions—which was funded through financing inflows of ₹1,325.00 crores. The closing cash position of ₹61.00 crores as of March 2025, whilst improved from ₹22.00 crores a year earlier, provides limited buffer for a trust of this scale.
Shareholding Dynamics: Promoter Dilution Raises Questions
A striking feature of Anzen's recent corporate history has been the dramatic reduction in promoter shareholding. Promoter stake plummeted from 71.01% in December 2024 to just 23.19% by September 2025—a massive 47.82 percentage point decline over three quarters. This included a 20.76 percentage point drop in the most recent quarter alone (June to September 2025). The sharp dilution raises questions about the promoters' confidence in the asset's near-term prospects and their capital allocation priorities.
The dilution has been accompanied by a corresponding surge in non-institutional holdings, which jumped from 20.38% in December 2024 to 65.26% by September 2025. This 44.88 percentage point increase suggests that retail and high-net-worth investors have been absorbing the promoter stake, potentially attracted by the trust's 3.59% dividend yield. However, the lack of meaningful institutional participation—with FII holdings at 0.00%, mutual fund holdings at just 1.19%, and insurance holdings at 2.44%—indicates limited conviction from sophisticated investors.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|---|
| Promoter % | 23.19% | 43.95% | 57.19% | 71.01% | 71.01% |
| QoQ Change | -20.76pp | -13.24pp | -13.82pp | — | — |
| FII % | 0.00% | 0.00% | 2.65% | 3.29% | 3.29% |
| Mutual Fund % | 1.19% | 1.21% | 1.27% | 0.00% | 0.00% |
| Insurance % | 2.44% | 1.22% | 1.22% | 0.00% | 0.00% |
| Non-Institutional % | 65.26% | 48.02% | 33.39% | 20.38% | 21.27% |
The trust's key promoter entities as of the latest disclosure include Edelweiss Infrastructure Yield Plus (15.09%) and Sepl Energy Private Limited (8.10%). The absence of promoter pledging is a positive, eliminating one potential source of risk. However, the dramatic reduction in promoter skin in the game may concern investors seeking alignment of interests between management and minority shareholders.
Peer Comparison: Valuation Premium Despite Weaker Fundamentals
When benchmarked against peers in the miscellaneous infrastructure space, Anzen India Energy Yield Plus Trust presents a mixed competitive profile. The trust's return on equity of 0.0% significantly trails peers such as Inventurus Knowledge Solutions (29.58%), R M Drip & Sprinklers (9.81%), and Altius Telecom (6.07%). This underperformance in capital efficiency metrics reflects the early stage of the trust's asset portfolio and the challenges of ramping up infrastructure projects to optimal utilisation levels.
| Company | P/E (TTM) | P/BV | ROE % | Div Yield % | Debt/Equity |
|---|---|---|---|---|---|
| Anzen IYEP Trust | NA (Loss Making) | 1.58x | 0.0% | 3.59% | 1.20x |
| Altius Telecom | 53.55x | 3.60x | 6.07% | 4.78% | 3.75x |
| Embassy Off. REIT | 136.70x | 1.88x | 3.81% | 0.11% | 0.91x |
| Mindspace Business | 56.81x | 2.36x | 3.43% | 4.83% | 0.77x |
| Inventurus Knowl | 54.05x | 11.72x | 29.58% | — | 0.24x |
| R M Drip & Sprin | 109.02x | 30.09x | 9.81% | 0.04% | 0.41x |
On valuation metrics, Anzen trades at a price-to-book ratio of 1.58 times, which is lower than most peers except Embassy Office Parks REIT (1.88x). This relatively modest P/BV multiple reflects the market's scepticism about the trust's ability to generate sustainable returns. However, the trust's dividend yield of 3.59% compares favourably with Embassy (0.11%) and R M Drip (0.04%), though it trails Mindspace Business Parks (4.83%) and Altius Telecom (4.78%).
The trust's debt-to-equity ratio of 1.20 times positions it in the middle of the peer group—higher than Embassy (0.91x), Mindspace (0.77x), and Inventurus (0.24x), but substantially lower than Altius Telecom's 3.75 times. This moderate leverage profile suggests some financial flexibility, though the weak interest coverage ratio indicates that debt servicing remains a near-term challenge.
Stock Performance: Outperformance Driven by Sectoral Tailwinds
Despite the challenging fundamentals, Anzen India Energy Yield Plus Trust's stock has delivered creditable returns over the past year. The shares gained 15.27% over the 12 months ending January 29, 2026, substantially outperforming the Sensex's 7.18% return and generating a positive alpha of 8.09 percentage points. This outperformance reflects growing investor interest in infrastructure and renewable energy plays, as well as the trust's attractive dividend yield in a low-yield environment.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Month | -0.68% | -2.84% | +2.16% |
| 3 Months | -2.50% | -2.53% | +0.03% |
| 6 Months | -0.85% | +0.97% | -1.82% |
| YTD | -0.68% | -3.46% | +2.78% |
| 1 Year | +15.27% | +7.18% | +8.09% |
However, more recent performance has been lacklustre. The stock declined 0.68% over the past month, though it outperformed the Sensex's 2.84% fall during the same period. Over three months, Anzen fell 2.50%, broadly in line with the market's 2.53% decline. The six-month return of -0.85% underperformed the Sensex's 0.97% gain, suggesting some momentum loss in the near term.
From a technical perspective, the stock exhibits a "Mildly Bullish" trend as of late January 2026, having transitioned from a "Bullish" stance in early November. The shares trade above their 5-day (₹116.38), 20-day (₹116.64), and 50-day (₹114.66) moving averages, indicating short-term strength. However, the stock remains 4.10% below its 52-week high of ₹122.00, whilst trading 15.27% above its 52-week low of ₹101.50.
With a beta of 1.35, Anzen exhibits higher volatility than the broader market, making it a high-risk, high-return proposition. The stock's 30.15% volatility over the past year—nearly triple the Sensex's 11.21%—underscores the elevated risk profile. The positive Sharpe ratio suggests that the returns have adequately compensated for this risk, though this metric can be volatile for infrastructure trusts with lumpy cash flows.
Investment Thesis: Growth Story Constrained by Capital Structure
Anzen India Energy Yield Plus Trust presents a nuanced investment case that balances robust operational performance against structural financial challenges. The trust's core strength lies in its infrastructure asset portfolio, which has generated impressive revenue growth—a five-year sales compound annual growth rate (CAGR) of 77.70% and EBIT CAGR of 77.58%. This exceptional top-line momentum reflects the trust's success in acquiring and ramping up power transmission and renewable energy assets in India's rapidly growing infrastructure sector.
The trust's operational efficiency is evident in its consistently high operating margins, which have averaged above 85% over the past several quarters. This operational excellence, combined with the defensive nature of regulated infrastructure assets, provides a solid foundation for long-term value creation. The trust's 3.59% dividend yield—supported by a 32.41% payout ratio—offers income-oriented investors an attractive yield in the current market environment.
However, these positives are substantially offset by concerning capital structure metrics. The trust's average ROCE of 6.72% and current ROCE of just 3.30% indicate that the assets are generating inadequate returns relative to the capital employed. More troubling is the negative ROE of 0.64%, which signals value destruction for equity holders. The root cause lies in the trust's elevated leverage—debt-to-EBITDA of 6.99 times and EBIT-to-interest coverage of merely 0.62 times—which results in interest expenses consuming a disproportionate share of operating profits.
Mojo Score Analysis: Hold Rating Reflects Mixed Fundamentals
Anzen's proprietary Mojo Score of 57 out of 100 places it firmly in "HOLD" territory, reflecting the tension between strong growth metrics and weak profitability. The score breakdown reveals: (1) Near-term drivers are NEUTRAL with flat quarterly financial trends offset by mildly bullish technicals; (2) Quality grade is AVERAGE, supported by healthy growth but undermined by weak return metrics; (3) Valuation is VERY EXPENSIVE at 1.58x book value for a loss-making entity; (4) Overall assessment is CAUTIOUS given mixed signals across parameters.
Key Strengths & Risk Factors
KEY STRENGTHS
- Exceptional Revenue Growth: Five-year sales CAGR of 77.70% demonstrates successful asset acquisition and ramp-up strategy in high-growth infrastructure sector
- Industry-Leading Operating Margins: Operating margins consistently above 85% reflect operational excellence and the regulated nature of transmission assets
- Attractive Dividend Yield: 3.59% yield provides meaningful income in low-yield environment, supported by sustainable 32.41% payout ratio
- Zero Promoter Pledging: Absence of pledged shares eliminates one key corporate governance risk factor
- Defensive Asset Class: Power transmission and renewable energy infrastructure offers stable, regulated cash flows with limited demand cyclicality
- Strong Operational Cash Generation: Operating cash flows of ₹240 crores in FY25 demonstrate ability to convert EBITDA into cash
KEY CONCERNS
- Persistent Losses: Net loss of ₹3.96 crores in Q3 FY26 marks third consecutive quarterly loss, raising questions about path to profitability
- Inadequate Interest Coverage: EBIT-to-interest ratio of 0.62x indicates operating profits insufficient to cover debt servicing obligations
- Weak Return Metrics: ROCE of 3.30% and negative ROE of 0.64% signal poor capital efficiency and value destruction for shareholders
- High Leverage: Debt-to-EBITDA of 6.99x and net debt-to-equity of 1.20x create financial fragility and limit distribution capacity
- Dramatic Promoter Dilution: Promoter stake collapsed from 71.01% to 23.19% over three quarters, raising alignment concerns
- Limited Institutional Support: Minimal FII (0.00%), mutual fund (1.19%), and insurance (2.44%) holdings indicate lack of sophisticated investor conviction
- Very Expensive Valuation: Trading at 1.58x book value despite loss-making status suggests limited margin of safety
Outlook: What to Watch in Coming Quarters
POSITIVE CATALYSTS
- Debt Refinancing: Successful refinancing at lower interest rates could materially improve interest coverage and profitability trajectory
- Asset Utilisation Ramp-Up: Continued improvement in asset utilisation rates would drive operating leverage and margin expansion
- Regulatory Tariff Revisions: Favourable tariff adjustments in transmission business could boost revenue realisation and cash flows
- Return to Profitability: Sustained quarterly profits would validate business model and potentially attract institutional investors
RED FLAGS TO MONITOR
- Further Promoter Dilution: Additional reduction in promoter stake below 20% would raise serious governance and alignment concerns
- Rising Interest Costs: Continued increase in absolute interest expenses without commensurate EBITDA growth would deepen losses
- Covenant Breaches: Violation of debt covenants could trigger accelerated repayment demands and liquidity stress
- Dividend Suspension: Inability to maintain dividend payments would eliminate key investment rationale for income-focused investors
The outlook for Anzen India Energy Yield Plus Trust over the next 12-18 months hinges on three critical factors: the trust's ability to improve interest coverage through either EBITDA growth or debt refinancing; stabilisation of the promoter shareholding pattern to restore confidence in management alignment; and a clear path to sustainable profitability that validates the current valuation premium. Investors should closely monitor quarterly interest coverage ratios, promoter stake movements, and the trust's success in attracting institutional capital.
The Verdict: Hold for Existing Investors, Avoid Fresh Entry
Score: 57/100
For Fresh Investors: Avoid initiating positions at current levels. Whilst the trust offers an attractive 3.59% dividend yield and operates in a structurally favourable infrastructure sector, the combination of persistent losses, weak return metrics (ROCE 3.30%, ROE -0.64%), inadequate interest coverage (0.62x), and "Very Expensive" valuation (1.58x book for a loss-making entity) creates an unfavourable risk-reward profile. The dramatic promoter dilution from 71% to 23% over three quarters raises additional governance concerns. Wait for evidence of sustained profitability and improved interest coverage before considering entry.
For Existing Holders: Maintain positions but closely monitor quarterly results for signs of profitability inflection. The trust's strong operational metrics (88.54% operating margins), robust revenue growth (64.13% YoY), and defensive asset class provide reasons for patience. However, set a clear exit trigger if the trust posts losses for two more consecutive quarters or if promoter stake falls below 20%. The 3.59% dividend yield provides some cushion whilst awaiting operational improvements, but do not average down at current valuations.
Fair Value Estimate: ₹95-100 per share (19-15% downside from current ₹117), based on 1.2-1.3x book value multiple appropriate for an infrastructure trust with sub-5% ROCE and negative ROE. Current valuation of 1.58x book appears unjustified given fundamental challenges.
Note: ROCE = (EBIT - Other income) / (Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The views expressed are those of the author and do not necessarily reflect the views of any affiliated organisations.
