Capital Infra

Capital Infra Trust delivered a robust Q4 FY26, reporting a standalone total income of INR 259 crores and consolidated total income of INR 345 crores. For the full fiscal year, AUM grew by 42% year-on-year to INR 6,611 crores, driven by the acquisition of 3 HAM assets that added INR 2,570 crores in enterprise value. The Trust achieved a DPU of INR 2.4 per unit for Q4 FY26, contributing to a total FY26 DPU of INR 11.6 per unit, alongside an improved net debt ratio of 40.9% and NAV of INR 74.7 per unit.

The company actively managed its debt profile by refinancing INR 2,000 crores of external borrowings at a competitive rate of 6.85%, which helped reduce the effective annualized interest rate to 7.24%. This strategic move, combined with INR 108 crores of debt repayment from internal accruals and INR 650 crores for NCD redemption, enhanced cash flow efficiency and optimized the debt structure. The coupon rate on one series of NCDs was also revised downward from 7.6% to 6.85%.

Capital Infra aims to significantly expand its AUM to INR 10,000 crores by FY27, primarily through its sponsor's ROFO pipeline. This pipeline currently includes 17 assets, with 8 at advanced stages for acquisition by Q3 FY27, representing a collective BPC of INR 7,100 crores. The Trust plans to acquire 4-5 of these assets and is also actively pursuing selective third-party acquisitions, targeting project-level IRRs of around 12%.

Management provided a DPU guidance of INR 9 to INR 9.25 per unit for FY27, translating to an expected cash yield of 13-13.5%. They anticipate DPU to increase by at least 10% in FY28. The Trust emphasized its commitment to minimizing equity dilution for future acquisitions, preferring debt funding to maintain NAV growth and ensure that acquisitions are accretive to existing unitholders.

The InvIT's business model benefits from fixed-price O&M contracts, which insulate it from inflationary pressures on raw materials like bitumen and other operational costs. A key advantage is the natural hedge against rising interest rates: the annuity-based revenue streams are linked to bank rates, ensuring that an increase in the cost of debt is offset by a corresponding increase in revenues, thereby protecting net inflows.

The Trust has a clear and staggered plan for major maintenance, with INR 170 crores allocated for FY27, followed by INR 90 crores in FY28, INR 100 crores in FY29, and INR 140 crores in FY30. This structured approach, combined with SEBI's recent permission for InvITs to use debt for major maintenance, ensures financial flexibility and consistent distributable cash flows without significant single-year impact.

Capital Infra Trust reiterated its strategic focus on the road sector, specifically on annuity-based assets. The management stated that they do not intend to diversify into other sectors like power or acquire toll assets in the near term. This focused approach leverages the Trust's core expertise, maintains a risk-averse profile, and ensures predictable revenue streams.