Capital Infra

Capital Infra Trust successfully strengthened its balance sheet by completing a preferential issue of INR 345 crores, which contributed to reducing net debt from ~55% in June 2025 to 45.6% as of November 14, 2025. The company plans to repay an additional INR 420 crores of existing borrowings by December 2025, utilizing INR 345 crores from the preferential allotment and INR 75 crores from internal accruals. This strategic deleveraging aims to maintain leverage within the 45-47% range in the short term and lower overall financial costs.

The InvIT is on track to acquire three operational HAM assets (Jodhpur Ring Road, Hasanpur-Bakhtiyarpur, Champa-Korba) within the next 60-90 days. These acquisitions, valued at an enterprise value of INR 2,590 crores and secured at a 9% discount, will add 164 kms of highways and are projected to increase AUM by over 60% from INR 4,282 crores to approximately INR 6,800 crores by FY26. The long-term roadmap targets an AUM of at least INR 10,000 crores by FY27, supported by a pipeline of 17 ROFO assets and potential third-party acquisitions.

For H1 FY26, Capital Infra Trust reported a total income of INR 393 crores and a net profit of INR 5 crores. While Q2 FY26 saw a net profit of INR 78 crores, this was significantly offset by a net loss of INR 73 crores in Q1 FY26. This Q1 loss was primarily attributed to a modification loss on financial assets resulting from a 75 bps change in RBI's bank rate. Additionally, an impairment of INR 311 crores in investment value was booked in H1 FY26, mainly due to interim distributions to unitholders and pending GST claims.

The board approved a distribution of INR 3.25 per unit for Q2 FY26, totaling INR 103.6 crores, bringing the cumulative DPU for H1 FY26 to INR 6.86 per unit (INR 3.61 for Q1 and INR 3.25 for Q2). Since inception, the company has declared a cumulative DPU of INR 30.8 per unit, reinforcing its commitment to consistent unitholder returns. Management anticipates that projects will sustain a cash yield of 10-12% going forward^⏳, ensuring predictable distributions.

The current average cost of debt stands at 7.6%, with the valuer's NAV calculation based on 7.68%. The company plans to secure additional debt for upcoming acquisitions at a lower target cost of 7.1-7.2%. While all current debt is in NCDs, future borrowings will transition towards repo-linked term loans to establish a natural hedge against interest rate fluctuations. A significant NCD series is due for renewal in March 2026, which the company intends to refinance at optimized rates, leveraging an existing reset clause.

Despite a recent slowdown in NHAI project awards over the last 12 months, management remains optimistic, expecting activity to rebound in H2 FY26. The road sector continues to exhibit strong momentum, with the Hybrid Annuity Model (HAM) remaining the preferred model for project awards. Sustained budgetary allocation from the government for the sector further strengthens the long-term outlook, creating a robust pipeline of opportunities for InvITs like Capital Infra Trust.