Ladies and gentlemen, good day and welcome to Capital Infra Trust results call for the quarter and half year ended September 30, 2025. Capital Infra Trust will be represented by Mr. Hare Krishna, Joint CEO, Mr. Amit Kumar, CFO. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Parikshit Kandpal from HDFC Securities. Thank you, and over to you, Mr. Kandpal.
Thank you, Anju. Without taking further time, I would like to hand the call to Hari for his opening remarks. Over to you, Hari.
No, thanks, Parikshit. Good afternoon, everyone, and thank you for joining us today. I am delighted to share that we have made strong progress during the quarter with reduced leverage, our balance sheet improvement, and we are on track to add three operational road assets within the next two months. These steps position us for significant premium growth as per our guidance during the IPO and reinforce our commitment to long-term value creation. I would like to take you through the highlights of the quarter and key strategic initiatives that are underway currently. First and foremost, we are focused on strengthening the balance sheet. We have successfully completed a preferential issue of INR 345 crore, meaningfully improving our financial position. This infusion has reduced net debt from 55% in June to 45.6% as of November 14, restoring regulatory headroom and lowering financial costs.
In total, we plan to repay INR 420 crore of existing borrowings by December, underscoring our commitment to disciplined capital management and a robust balance sheet. Our financial fundamentals remain strong, supported by triple A stable ratings from ICRA and CARE, with healthy annuity inflows, stable operating expenses, and competitive borrowing costs. Going forward, we intend to opt for revolving borrowing rather than fixed-cost debentures, creating a natural hedge and further strengthening our debt profile. We will maintain a conservative approach in our future borrowings with a clear focus on keeping the leverage in the range of 45%-47% in the short term. Coming to second priority is the portfolio expansion through value-accretive acquisitions. Our growth plan for FY 2026 is progressing well.
We are leveraging our ROFO rights to acquire three operational HAM assets, namely JRR Highways Private Limited in Rajasthan, Hasanpur Bakhtiyarpur in Bihar, and Champa Korba in Chhattisgarh. These assets have a residual concession period of over 13 years, providing long-term revenue visibility and a predictable annuity inflow, making them highly accretive for unitholders. Collectively, these acquisitions will add 164 km of operational highways, broaden our geographic presence, and increase our AUM by over 60% from INR 4,282 crore to approximately INR 5,800 crore by FY 2026. Furthermore, these asset acquisitions are being done at a 9% discount to the enterprise value of INR 2,590 crore, ensuring value accretion for investors. Thirdly, we remain committed to delivering consistent DPU distributions to our unitholders.
Since inception, we have declared a cumulative DPU of INR 30.8 per unit, reflecting our focus on unitholders' returns. In the second quarter, our board has approved distribution of INR 3.25 per unit, totaling INR 103.6 crore. Going forward, our priority is to ensure a sustainable and predictable distribution pattern. The planned additions of high-quality assets will further strengthen cash flows and support this objective. Coming to the performance and industry highlights. The second quarter was marked by operational stability across all the nine HAM assets that we have, with consistent riding quality and maintenance standards. Our annuity receipts stood at INR 523 crore, which was in line with our estimates. We maintained consistent risk distribution aligned with our H1 FY 2026 guidance. The assets under management currently stands at INR 4,282 crore.
The broader industry dynamics also remains favorable. The road sector continues to see strong momentum, with HAM continuing as a preferred model for project awards. Government initiatives and sustained budgetary allocation for the road sector further strengthens the long-term outlook for the sector and creates a solid pipeline of opportunities for investors like us. Looking ahead, our strategy remains firmly focused on building a diversified portfolio of HAM assets which are backed by predictable inflation-linked annuity inflows. In turn, we will continue to operate these assets in an efficient manner and maintain an optimum leverage. Our clear roadmap targets an AUM of achieve INR 10,000 crore by FY 2027 through a pipeline of 17 ROFO assets from sponsors and acquisition of third-party assets, thereby ensuring growth and consistent distribution. I will hand over to Amit for update on financial performance.
Thank you, Hare. Good afternoon, everyone. I will take you through the key financial updates of the Trust. On consolidated basis, our total income works out to INR 393 crores with a net profit of INR 5 crores as compared to total income of INR 159 crore and loss of INR 37 crores in the last quarter. Since the Trust got listed in the month of January 2025 only, comparatives for H1 FY 2025 are not available. While there was a net profit of INR 78 crores in Q2, it got offset to an extent of INR 73 crores by net loss booked in Q1, which was mainly due to modification loss on financial assets booked due to change in the bank rate by RBI to the tune of 75 bits since the starting of this current year.
Talking about the profit and loss on standalone basis, the Trust recorded a total income of INR 401 crores, consists of dividends from subsidiaries of INR 194 crores, interest income on loans extended by Trust to FPE of INR 205 crores and other revenue income of INR 1 crore. EBITDA for the H1 works out to INR 297 crores. During the current half year, an impairment in the value of investment is booked amounting to INR 311 crores. The main constituents for the same was interim distribution of INR 307 crores to the unitholder in June 2025, change in bank rates, and approval pending for GST change of law from NHAI.
For the period under consideration, the total distribution per unit for the H1 works out to INR 6.86 per unit, out of which INR 3.61 per unit was already paid from Q1, and remaining INR 3.25 per unit is proposed to be paid now. In the form of interest of INR 2.52 per unit, taxable dividend of INR 0.71 per unit and other income of INR 0.02 per unit. Since distribution from the FPE to Trust are tax-free in the hands of the Trust, the tax outflow on standalone basis is only on the other income earned by the Trust. In summary, Capital Infra Trust is entering into a new phase of growth driven by balance sheet de-leveraging, value accretive acquisition, and disciplined capital allocations, all aimed at delivering sustainable long-term value for our stakeholders.
Thank you for your attention. All other information is available in our presentation. We can now open the floor for any questions you may have.
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Pravesh Kumavat from Kumavat Investments. Please go ahead, sir.
Hi. Thanks for taking my question. The first question is that with the current average cost of debt that you have is around 7.7% or thereabouts, and wanted to ask, what is your planned approach to raising the future debt and how do you intend to optimize the consolidated borrowing cost of borrowing for that?
Yeah. As of now, our current borrowing, the average cost is around 7.68%. As I mentioned earlier, we are pretty much working towards the acquisition of the Sira project. For that, we would be taking additional debt as well, for which we are in discussions with banks right now, and we anticipate getting a cost of around 7.1%- 7.2% for the additional borrowing. So that's where it stands. Even in the existing borrowings, we have one series which is due for renewal March next. That's what we will also work on to refine the similar range of around 7.1% - 7.2%.
Okay. Just connected to this, just wanted to ask that if you can outline the debt strategy going forward. I mean, what will be your debt to AUM ratio if we continue to raise the debt, and how do we plan to keep this leverage around the 45% mark?
Yeah. See, InvIT IPO happened in January and till we are making sixth distribution, our leverage needs to be within 49% mark. In the medium term, our strategy would be to keep our leverage between 45%-47%. Once we have made sixth distribution, then we will revisit this strategy and may look at increasing our overall leverage to AUM in the range of 55%-60%. But till that time, we will continue to maintain it in the range of 45%-47% mark.
Okay. Just to largen that, NCDs will be our primary route going forward as well as we expand our AUM?
100% of our debt as of today is in the form of NCDs. The additional borrowing which we are going to take, we would 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. That's our strategy going forward.
Okay. Got it. Sure, thanks. If I have more questions, I'll come back to you.
Thank you. Next question comes on the line of Rohan Shah with AJ Investments. Please go ahead.
Hi, thanks for the opportunity. Sir, just wanted to understand, as our NDCF, net distributable cash flow for Q2 was INR 104 crore. Could you share how NDCF is expected to evolve after integration of three ROFO assets?
With the addition of the three ROFO assets, our NDCF is going to improve only because these three are again operational assets. For two of them, we have already received three annuities and the third one, we will be receiving one. If I were to answer it from other parameters, then for instance, with regards to the enterprise value, they are coming at 9% discount to the fair market value. Therefore, they are going to be accretive. At this stage, because we are still working on the acquisition and therefore we are still working on the fund raise, therefore to anticipate the number of units to be allocated for this acquisition, that is something still open at this stage. Therefore, it would be difficult to comment on the precise NDCF addition which will happen from the three assets, but overall they will remain accretive.
Understood. That is helpful, sir. One more question. Can you provide the current split between fixed versus floating debt and the targeted mix over the next 12 months?
As of now, we have two series of debentures. One for the first series, the rate of interest is fixed for three years since we took it, which is up to March 2028. For the other series, the coupon set is fixed till March 2026.
Okay. That is from my side. Thank you, sir.
Thanks.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Advit Kumar with AV Advisors. Please go ahead.
Hello, sir. Good afternoon. Am I audible?
Yes, you are. Please go ahead.
Thank you for taking my question, sir. I have a few questions to ask. I wanted to understand what is the expected timeline for completing the acquisition of three assets in FY 2026 and what is the estimate of increase in NAV once these assets are consolidated?
As of now, we are working on raising both equity and debt capital to finance the acquisition, and this we intend to close out over the next 60-90 days from today. We received the unitholders approval in October, and thereafter we have been working in this regard. With regards to the NAV per se, our current NAV as of today is around 67.48. With preferential allotment, this will marginally increase further to the range of around 69. Again, with regards to the NAV impact of the three assets, we can give an exact number only when the number of units and the unit price of equity fund raise is being established, which we are yet to do right now.
At this stage, we estimate that it would be somewhere in the range of INR 73-INR 75 once the equity raise and debt raise has happened and the assets have been acquired.
Right. I understand, sir. But then, sir, one more thing. On these three right of first offer assets that are being acquired, what is the expected equity IRR also? How does it compare with the current portfolio IRR?
Yeah.
If you could—
These three assets which they are coming in right now, because they are at 9% discount to the enterprise value, therefore the corresponding standalone IRR of these three ROFO assets is quite high. It is in the range of above 14% range per se on a standalone basis for these three assets.
Mm-hmm. Okay. Understood, sir. Got it. Yeah. Okay, sir, I understood this. Sir, last question from my end. Sir, going forward, what is your long-term approach or the guidance for DPU? If you could share some outlook for the next year and maybe, let us say a couple of years or at least next year.
Yes, sure. See, so far this financial year, we are pretty much in line with the guidance which we have provided in the beginning of the year. Going forward, our projects can easily sustain a cash yield of somewhere between 10%-12% in that range, and that's what we can provide right now. The exact guidance we can give only at the beginning of the year, which will be doing again in the beginning of the next financial year. As of now, what we can convey is that our target would be at least we are distributing cash yields of 10%-12%.
Understood. All right. I think those were my questions. Thank you so much for answering them in detail. Thank you so much, sir.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Aisha Shah with Value Worth Investments. Please go ahead.
Thank you for the opportunity. Sir, you have mentioned INR 420 crore debt repayment planned by December poses reduction. How do you see the leverage ratio shaping up by FY 2026 end?
Yes. We plan to prepay our debentures by around INR 420 crore, of which INR 345 crore is from the preferential allotment and additional INR 75 crore from our internal accrual. As of November 14, the debt ratio and the leverage which is there, which is around 45.6%, is including this cash element as well and is including this aspect. Therefore, from here on, pretty much we should remain in the range of 45%-47% mark with regards to the debt schedule as leverage to EV ratio.
Thank you, sir. That's all from my side.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Anant Mundra with My Temple Capital. Please go ahead.
Hello. Thank you for the opportunity. Sir, just wanted to understand the current NAV calculation is based on what borrowing cost? What is the borrowing cost that has been assumed by the valuer?
That's based on the current borrowing cost, which has been assumed by the borrower, by the valuer, which is—
Understood.
7.60%.
Okay. But there is a reset clause, right? So this rate should go down in future. That understanding is correct, right?
Yes, that's correct. That's what we are also working towards. We will be managing that the additional borrowing, which we are going to take immediately to finance the acquisition of three assets, are going to reduce the overall cost. Partially, one of the three NCDs for which put call option is available in March next year, for that, we will try to refinance them so that we have an efficient debt profile and competitive cost.
Okay. That upside is not being captured in the current NAV calculation because that could potentially come in in future. March 26th is the first NCD reset clause, right?
Yes, you are correct. The valuations are based on the current cost of debt, which is at 7.60%. This would happen once we have completed the issue time.
Got it. The prepayment we are doing for the NCD, I think about INR 420 crores. Is there any prepayment penalty also that we have to pay on this?
No, not for this. This is permitted, and we will not be paying any prepayment penalty for paying this now.
Okay. Sir, by when do we plan to complete the three acquisitions? Is there a timeline that we have?
We are pretty much working on it. Our endeavor would be to complete it within the next 60-90 days. That's our target right now.
Okay. How are we trying to fund the equity portion? Will it be a unit swap or we'll be doing another pref?
In total, we are budgeting around say, ballpark, we will be requiring around INR 2,400 crore to complete the acquisition. Of which at this stage, our planning is to raise funds, equity funds of around INR 1,250 crore, either through QIP or mix of preferential allotment and around INR 1,150 crore as debt. That's our overall target right now.
Got it. Sir, just one final question. What is the investment manager project and the project manager's fee that is paid from the trust? Is there also any kind of some incentive fee that the manager is entitled for on acquisitions?
No, not really. The investment management and the project management fee pretty much remains the same, which was disclosed at the time of IPO. Our investment management fee is 1.1% of the revenue which SPVs collects. Project management fee is a fixed amount, which is payable for completely entire operations and maintenance of all the assets, which was again agreed at the time of beginning of the project itself and at the time of IPO itself. There is no variation in that part of the agreement.
Incentive fees?
We do not have any incentive fees over here. It is a mix of only investment management fees which comes to investment manager and project management fees, which is payable to CPL as part of project management fees.
It is got informed. Sir, any update or any color that you can give on how are we thinking to acquire any non-sponsored assets?
If I were to update you on our extension plan, first starting with the sponsored assets first, there were ROFO of about 17 assets, of which three we are acquiring right now. 14 would be ready to acquire over the next one to three years. 4-5 assets could be ready in the next financial year as well, which potentially means that AUM around INR 3,000-INR 4,000 crores can be added with the sponsored assets themselves. In addition, we are targeting to acquire third-party assets themselves, which we are working on. Next financial year, we target to at least have at least one to three assets in that regard. With regards to strategy, we will continue to focus right now on HAM-based assets. We would not like to diversify at all at this stage.
Our immediate strategy would be to just focus on HAM assets from third-party developers.
Okay. Got it, sir. Thank you. That is it from my end.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Rohan Shah with AJ Investments. Please go ahead.
Yeah, hi. Thanks for taking my follow-up question, sir. I just wanted to understand, can you provide an explanation about the InvIT strategy going forward, like five years kind of vision?
Yeah. I'll say, if I were to talk about a five-year vision per se, our strategy would be to continue to focus on and keep on adding HAM-based road projects, because that's what our expertise is and that's what we started with. So over the next five years, our strategy would be essentially to not only focus on the assets for which we have ROFO from sponsors, but third-party acquisitions as well. So that in five years' time, we are building a decent portfolio which is diversified and which provides a stable annuity cash flow and which can be distributed and thereby generating a stable dividend income for the unitholder. Broadly, that's what I can summarize at this stage. The key elements would be focus on the HAM-based road sector as of now, target sponsor deal ROFO assets and third-party assets altogether.
Understood, sir. That's helpful. So one more on the industry base. How is the industry scenario? Are you seeing more project opportunities going forward?
We all are aware that in the last 12 months, the number of projects being awarded by NHAI have been relatively less compared to the previous cycles. However, we understand that the allocation overall is going to remain the same and the activity is going to pick up in the second half of the financial year. Therefore, from an industry perspective, we remain optimistic that there will be enough opportunities for players like us to acquire assets from, even in the short term and in the medium term, both of them, because these are integral parts of growth for the country, for the nation. And the overall allocation of the government in this sector remains at the healthy level, though it may be slightly less than two years before, but it overall remains at the healthy level.
Understood, sir. That's from my side. Thank you, sir.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes on the line of Anjali Singh with Bansal Family Office. Please go ahead.
Hi. Thanks for the opportunity. My first question is, the ROFO valuation summary shows a combined EV of around INR 2,590 crores. What is the expected initial yield contribution to InvIT's post-acquisition?
Yes. The enterprise value is 2,590. It's very difficult to comment upon what would be the yields in the first year of the project, per se. That's something once we have acquired and we have pre-cast arrangements, we will be able to convey to you. But overall, in terms because these are being attractively priced because of the inherent discount over there, they are going to be accretive to the existing investors, per se. And they are going to enhance the IRRs and help in sustaining the DPU.
Okay. So one more question. Over the next 24 months, how many additional ROFO assets do you expect to add beyond the three targeted this year?
Yeah. See, around 4-5 ROFOs there again would be ready for acquisition between June to July next year. So at that point of time. An additional two to three will be ready towards the end of FY 2027. That is what we understand right now, which is based on the progress of the under ROFO asset as we speak right now.
Okay. Thank you so much, sir. Thank you.
Thanks. Bye.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments. Management, please go ahead.
Thank you. Thank you everyone for joining the call. Capital Infra Trust is, as we already said that we are entering into a new phase of growth, which will be driven by balance sheet de-leveraging, value accretive acquisitions, and disciplined capital allocation. All aimed at delivering sustainable and long-term value to our stakeholders. Thank you once again for joining the call.
Thank you. On behalf of Capital Infra Trust, that concludes this conference. Thank you for joining us. You may now disconnect your lines.