Capital Infra Trust Q2 FY2026 Concall Summary

Key Takeaways

• Balance sheet reset, growth now in focus: A preferential issue of INR 345 crores cut net debt from ~55% to 45.6%, clearing regulatory headroom and lowering financial costs, while the company laid out a path to nearly double AUM by FY27.
• Three ROFO assets to close within 90 days: The acquisitions, priced at a 9% discount to fair market enterprise value, will lift AUM from INR 4,282 crores to approximately INR 6,800 crores and are expected to improve net distributable cash flow.
• Distribution commitment held steady: The board approved INR 3.25 per unit for Q2, totaling INR 103.6 crores, and management guided to a sustainable cash yield of 10% to 12% over the projects' life.
• Debt strategy is pivoting to floating-rate: The company will shift from fixed-cost debentures to repo-linked term loans, creating a natural hedge between inflows and interest cost, with anticipated borrowing costs of 7.1% to 7.2%.
• What to watch next quarter: Closure of the three ROFO acquisitions and the resulting recast NAV, the pace of the INR 420 crore debt repayment by December, and any progress on the third-party acquisition pipeline targeted for FY27.

Balance Sheet & Capital Allocation

• Preferential issue delevered the trust: INR 345 crores raised reduced net debt to 45.6% as of November 14, 2025, restoring headroom under the 49% regulatory cap and lowering interest expense going forward.
• INR 420 crore debt repayment by December: The company plans to repay existing debentures using INR 345 crores from the preferential allotment and INR 75 crores from internal accrual, with no prepayment penalty on the NCDs.
• Leverage target set in two phases: Management will keep leverage in the 45% to 47% range in the short term; after six distributions, it may revisit the strategy and increase overall leverage to AUM in the 55% to 60% range.
• Borrowing cost has room to fall: The current NAV calculation assumes a 7.68% borrowing cost, but a reset clause means that rate should decline, an upside not yet captured in the NAV.
• Management fee structure is fixed and transparent: The investment management fee is 1.1% of revenue, the project management fee is a fixed amount agreed at IPO, and there is no incentive fee.

Hare Krishna: "In the medium term, our strategy would be to keep our leverage between 45% to 47%. 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%."

ROFO Asset Acquisitions

• Three assets to close in 60 to 90 days: Jodhpur Ring Road, Hasanpur-Bakhtiyarpur, and Champa-Korba, all operational HAM assets with annuities already being received, received unitholder approval in October 2025 and are on track to close within the next two to three months.
• Priced at a discount to fair value: The assets are coming at a 9% discount to fair market value on an enterprise value basis, though the exact NAV impact depends on the unit count and price of the equity fund raise still to be determined.
• NDCF expected to improve post-acquisition: Because the three assets are already operational and receiving annuities, their addition should strengthen net distributable cash flow, though management declined to quantify the initial yield contribution until the balance sheet is recast.
• NAV estimate offered with a caveat: Management indicated a post-acquisition NAV range of INR 73 to 75 per unit but stressed the exact number can only be given once the equity fund raise terms are finalized.

Hare Krishna: "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."

Debt Strategy & Financing

• Shift from fixed debentures to floating-rate term loans: Additional borrowings will be linked to the repo rate, creating a natural hedge between annuity inflows indexed to bank rate and interest costs.
• Anticipated borrowing cost of 7.1% to 7.2%: Both the new debt for the ROFO acquisitions and the refinancing of an existing NCD series due for renewal in March 2026 are expected to price in this range, below the 7.68% currently assumed in the NAV.
• Existing NCDs to be refinanced on better terms: One series of NCDs with a put/call option available in March next year will be refinanced to achieve a more efficient debt profile and competitive cost.

Hare Krishna: "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."

AUM Growth & Acquisition Pipeline

• AUM to nearly double by FY26: From INR 4,282 crores currently to approximately INR 6,800 crores once the three ROFO assets are consolidated, with a further target of at least INR 10,000 crores by FY27.
• 14 ROFO assets available over one to three years: Four to five assets with an enterprise value of around INR 3,000 to 4,000 crores will be ready for acquisition by June to July next year, with an additional two to three toward the end of FY27.
• Third-party acquisitions now part of the mandate: The company targets acquiring at least one to three third-party assets in the next financial year, expanding beyond the sponsor pipeline while staying focused on HAM-based road projects.
• No diversification into toll assets: Management confirmed the strategy will remain anchored in HAM-based assets, which provide stable annuity cash flows, and will not extend into toll-road exposure at this stage.

Hare Krishna: "So, over the next five years, our strategy will be essentially to not only focus on the assets for which we have ROFO from sponsors, but third-party acquisitions as well."

Distributions & Cash Yield

• Q2 distribution of INR 3.25 per unit: Totaling INR 103.6 crores, consistent with H1 FY26 guidance and the priority of maintaining a sustainable and predictable distribution pattern.
• Cash yield guided at 10% to 12%: Management stated the projects can sustain a cash yield in that range, with exact annual guidance to be provided at the beginning of each year.
• Annuity receipts in line with estimates: INR 523 crores received during the quarter, reflecting the operational stability of all nine HAM assets, which maintained consistent riding quality and maintenance standards.

Operational Performance & Industry Context

• Net profit of INR 78 crores in Q2: This offset a net loss of INR 73 crores in Q1 FY26, which was driven primarily by a modification loss on financial assets following a 75 bps change in the RBI bank rate.
• All nine HAM assets operationally stable: Riding quality and maintenance standards were maintained across the portfolio during the quarter, supporting the reliability of annuity receipts.
• Industry award pace slowed but outlook intact: NHAI project awards in the last 12 months were relatively lower than the previous cycle, but overall government allocation remains healthy and activity is expected to pick up in the second half of the financial year.
• Credit ratings reaffirmed: CRISIL and CARE both maintain AAA/Stable ratings on the trust.

Amit Kumar: "Capital Infra Trust, as we already see, is entering into a new phase of growth, which will be driven by balance sheet deleveraging, value-accretive acquisitions, and disciplined capital allocation."

Guidance & Commitments

Key Metrics