Capital Infra — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

Capital Infra Trust reported a mixed Q2 FY26, with strong operational progress and strategic deleveraging overshadowed by one-off financial impacts. The company successfully reduced net debt to 45.6% and is on track to acquire three value-accretive HAM assets, boosting AUM by over 60% to INR 6,800 crores by FY26. However, H1 FY26 net profit was significantly reduced by a Q1 loss and an impairment charge related to financial asset modification and interim distributions. Management remains committed to consistent DPU and targets an AUM of INR 10,000 crores by FY27.

Highlights

  • Net debt reduced from ~55% in June 2025 to 45.6% as of November 14, 2025, following a preferential issue of INR 345 crores.

  • On track to acquire three operational ROFO HAM assets (Jodhpur Ring Road, Hasanpur-Bakhtiyarpur, Champa-Korba) within two months, adding 164 kms and increasing AUM by over 60% to INR 6,800 crores by FY26.

  • Asset acquisitions are at a 9% discount to the enterprise value of INR 2,590 crores, ensuring value accretion.

  • Board approved Q2 FY26 distribution of INR 3.25 per unit, totaling INR 103.6 crores, maintaining consistent DPU.

  • Annuity receipts stood at INR 523 crores, in line with estimates.

Concerns

  • H1 FY26 net profit of INR 5 crores was significantly impacted by a net loss of INR 73 crores in Q1 FY26 due to a modification loss on financial assets (75 bps RBI rate change).

  • An impairment of INR 311 crores in investment value was booked in H1 FY26, primarily due to interim distribution of INR 307 crores to unitholders in June 2025, bank rate changes, and pending GST claims.

Key financials

4 periods

Headline

  • AUM (Current)
    ₹4,282 Cr

Q2 FY26

  • Net Profit
    ₹78 Cr

H1 FY26

  • Total Income
    ₹393 Cr
  • Net Profit
    ₹5 Cr
  • DPU
    ₹6.86

H1 FY26 Standalone

  • EBITDA
    ₹399 Cr

What they filed

Q1 FY27: revenue up 37.0%, net profit up 270.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue159 189 179 178 283 +78%259 +37%
EBITDA-3 -81 127 44 220 +7433%145 +279%
Net profit-37 -74 78 11 195 +627%126 +270%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹4,282 Cr

as of 2025-09-30 quantified

Inflow this quarter

₹2,590 Cr

Execution

on track to add three operational ROFO assets within the next two months

Pipeline

qualified rfp

Pipeline of 17 ROFO assets from sponsor and third-party acquisitions

The company is on track to acquire three operational ROFO assets, which will significantly increase AUM and are being acquired at a discount, ensuring value accretion. A robust pipeline of 17 ROFO assets and third-party acquisitions supports future AUM growth targets.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed Cost 7.6%
    • Repayment Repayment of existing borrowings by December 2025, funded by INR 345 crores from preferential allotment and INR 75 crores from internal accruals. ₹420 Cr
    • Rate reset One series of debentures due for renewal in March 2026, planned to be refinanced at 7.1% to 7.2%.
    As of now, the average cost of our current borrowings is around 7.6%.
  • Dividend ₹3.25/share (interim)
    In the second quarter, our board has approved distribution of INR 3.25 per unit, totaling INR 103.6 crores.
  • M&A Jodhpur Ring Road, Hasanpur-Bakhtiyarpur, Champa-Korba HAM assets Acquisition · Pending regulatory · Consideration ₹[object Object] (mixed)

    To add 164 kms of operational highways, broaden geographic presence, and increase AUM by over 60% to INR 6,800 crores by FY26. Acquisitions are at a 9% discount to EV, ensuring value accretion.

    Expected to increase AUM by over 60% from INR 4,282 crores to approximately INR 6,800 crores by FY26. Standalone IRR of these assets is above 14%.

    ROFO rights to acquire operational HAM assets namely Jodhpur Ring Road in Rajasthan, Hasanpur-Bakhtiyarpur in Bihar, and Champa-Korba in Chhattisgarh. ... Collectively, these acquisitions will add 164 kms of operational highways, broaden our geographic presence, and increase our AUM by over 60% from INR 4,282 crores to approximately INR 6,800 crores by FY26. Furthermore, the asset acquisitions are being done at a 9% discount to the enterprise value of INR 2,590 crores, ensuring value accretion for investors.

Guidance & targets

Debt

  • Leverage Ratio Debt · short term · High confidence 45% to 47%
    We will maintain a conservative approach in our future borrowings, with a clear focus on keeping the leverage in the range of 45% to 47% in the short term.

    — Mr. Hare Krishna

  • Long-term Leverage to AUM Debt · long term (after six distributions) · Medium confidence 55% to 60%
    Once we have made six distributions, then we will revisit this strategy and may look at increasing our overall leverage to AUM in the range of 55% to 60%.

    — Mr. Hare Krishna

  • Debt Repayment Debt · by December · High confidence INR 420 crores
    In total, we plan to repay INR 420 crores of existing borrowings by December, underscoring our commitment to disciplined capital management and a robust balance sheet.

    — Mr. Hare Krishna

AUM

  • AUM Growth AUM · FY26 · High confidence INR 6,800 crores

    From INR 4,282 crores today

    increase our AUM by over 60% from INR 4,282 crores to approximately INR 6,800 crores by FY26.

    — Mr. Hare Krishna

  • AUM Target AUM · FY27 · High confidence INR 10,000 crores
    Our clear roadmap targets an AUM of at least INR 10,000 crores by FY27, through a pipeline of 17 ROFO assets from sponsor and acquisition of third-party assets, thereby ensuring growth and consistent distribution.

    — Mr. Hare Krishna

Acquisition

  • 3 ROFO Asset Acquisition Timeline Acquisition · from November 18, 2025 · High confidence 60 to 90 days
    And we intend to close out over the next 60 to 90 days from today.

    — Mr. Hare Krishna

  • Future ROFO Asset Readiness Acquisition · FY27 · Medium confidence 4 to 5 assets by June-July next year; 2 to 3 assets by end of FY27
    Around four to five ROFO assets, again will be ready for acquisition by June to July next year. Additional two to three will be ready towards the end of FY27.

    — Mr. Hare Krishna

Distribution

  • Cash Yield Distribution · going forward · Medium confidence 10% to 12%
    Going forward, our projects can sustain a cash yield of somewhere between 10% to 12% in that range. And that's what we can provide right now.

    — Mr. Hare Krishna

What to watch in Q3 FY26

Completion of 3 ROFO Asset Acquisitions

Within next 60-90 days (by February 2026).
Current On track, unitholder approval received.
Target Acquisitions closed, assets integrated.

Why it matters

Key growth driver, expected to increase AUM by over 60% and be value-accretive.

we are working on raising both equity and debt capital to finance the acquisition. And we intend to close out over the next 60 to 90 days from today.

Risks & concerns

  • Modification Loss on Financial Assets

    medium

    A net loss of INR 73 crores in Q1 FY26 was due to modification loss on financial assets from a 75 bps RBI rate change, impacting H1 FY26 net profit.

    Management acknowledged

  • Impairment in Investment Value

    medium

    An impairment of INR 311 crores in investment value was booked in H1 FY26, primarily due to interim distribution to unitholders, bank rate changes, and pending GST claims.

    Management acknowledged

  • Slowdown in NHAI Project Awards

    medium

    The number of projects awarded by NHAI has been relatively less in the last 12 months compared to the previous cycle, though management expects activity to pick up in H2 FY26.

    Management acknowledged but optimistic

Q&A highlights

7 direct
Cost of Debt & Debt Strategy Direct
As of now, the average cost of our current borrowings is around 7.6%. ... We will maintain a conservative approach in our future borrowings, with a clear focus on keeping the leverage in the range of 45% to 47% in the short term. ... The additional borrowings which we are going to take, will try to bring it in the form of term loans which are linked to repo-rate so that there is a natural hedge between the inflows which we receive and our intrinsic expenditure.

Provides a clear strategy on debt management, cost reduction, and leverage targets, crucial for an InvIT's financial health and stability.

Asked by Mr. Pravesh Kumavat

NDCF Evolution Post-Acquisition Partial
See, with the addition of the three ROFO assets, our NDCF is going to improve only because these three are operational assets. ... If I were to answer it from other parameters, then for instance, with regard to the enterprise value, the assets are coming at 9% discount to the fair market value. So therefore, they are going to be accretive.

Directly addresses the impact of new acquisitions on distributable cash flow, a key metric for InvITs, indicating a positive but unquantified impact due to pending unit allocation.

Asked by Mr. Rohan Shah

Fixed vs. Floating Debt Mix Direct
So as of now, we have two series of debentures. For the first series, the rate of interest is fixed for three years since we took it, which is up to March '28. For the other series, the cost of debt is fixed until March '26.

Details the company's interest rate risk management strategy and the current and future profile of its debt.

Asked by Mr. Rohan Shah

Acquisition Timeline & NAV Impact Direct
we are working on raising both equity and debt capital to finance the acquisition. And we intend to close out over the next 60 to 90 days from today. ... With regards to the NAV per se, our current NAV as of today is around 67.48/unit. With preferential allotment, this will marginally increase further to the range of around 69/unit. ... the estimate would be somewhere in the range of INR 73 to INR 75 once the equity raise and debt raise has happened, and the assets have been bought.

Provides concrete timelines for key growth initiatives and quantifies the expected impact on NAV, a critical investor metric for InvITs.

Asked by Mr. Advit Kumar

Equity IRR of New Assets vs. Current Portfolio Direct
So, for these three assets which are proposed to acquire right now, since they are at 9% discount to the enterprise value, the corresponding standalone IRR of these three ROFO assets is quite high. It's in the range of above 14% range per se on a standalone basis for these three assets.

Confirms the accretive nature of the upcoming acquisitions and provides a key return metric for the new assets, indicating strong profitability.

Asked by Mr. Advit Kumar

Long-term DPU Guidance Direct
Going forward, our projects can sustain a cash yield of somewhere between 10% to 12% in that range. And that's what we can provide right now.

Provides insight into the expected future distributions, which is the primary return for InvIT unitholders, offering a clear yield range.

Asked by Mr. Advit Kumar

NAV Calculation & NCD Reset Clause Direct
So, that's based on the current borrowing cost, which has been assumed by the valuer which is 7.68%. ... Yes, that's correct. And that's what we are also working towards. ... Yes. You are correct. The valuations are based on the current cost of debt, which is at 7.68%. So, this will happen once we will completed the exercise.

Clarifies the assumptions behind NAV valuation and highlights the potential for future cost of debt reduction through the NCD reset clause in March 2026.

Asked by Mr. Anant Mundra

Funding for Equity Portion of Acquisitions Direct
In total, we will be requiring around INR 2,400 crores to complete the acquisition, of which at this stage our planning is to raise equity funds of around INR 1,250 crores, either through QIP or a preferential allotment and around INR 1,150 crores as debt, that is our overall target right now.

Details the capital structure for the significant upcoming acquisitions, outlining the mix of equity and debt funding.

Asked by Mr. Anant Mundra

3 min read 6 chapters

Detailed narrative

Balance Sheet Strengthening & Deleveraging Initiatives

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.

Strategic Asset Acquisitions & AUM Growth Roadmap

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.

H1 FY26 Financial Performance and One-off Impacts

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.

Consistent Distribution to Unitholders

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.

Debt Structure and Cost Optimization Strategy

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.

Favorable Industry Dynamics and Future Opportunities

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.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Construction earnings calls