Capital Infra Trust Q3 FY2026 Concall Summary

Key Takeaways

• DPU guidance reset, now yield-based: Management withdrew its earlier H2 DPU target of ₹7.75 and replaced it with an 11% to 12% annualized cash yield framework, citing the RBI rate-cut cycle’s impact on revenue potential and the effects of capital raises and asset additions.
• NAV rose 7.2% on accretive deals: NAV reached ₹72.31 per unit, driven by three ROFO acquisitions closed at a 9.3% discount to adjusted enterprise value and continued deleveraging; the figure excludes a ₹60.6 crore indemnity claim from NHAI.
• AUM jumped 57% and the pipeline is full: Portfolio expanded from ₹4,282 crores to ₹6,733 crores; management plans to add 5 to 7 more assets by FY27, including its first third-party HAM acquisitions, targeting an 11.5% to 12% IRR.
• Consolidated profit dipped on a non-cash accounting swing: A modification loss in Q3, reversing a Q2 modification gain, pushed consolidated net profit down to ₹11 crores; standalone net profit was a cleaner ~₹85 crores, reflecting the underlying SPV income flow.
• What to watch next quarter: The fresh FY27 DPU and NAV guidance promised in March, progress on the first third-party deal diligence starting in Q4, and whether the effective interest rate falls to the targeted 7.35%.

Distribution & Yield Framework

• Old DPU guidance abandoned: Management explicitly withdrew its earlier H2 FY26 DPU guidance of ₹7.75, replacing it with a yield-based framework after the RBI rate-cut cycle reduced HAM-linked revenue potential and capital raises changed the unit base.
• New cash yield target set at 11% to 12%: The target is based on the current portfolio’s cash generation capability and is described as fully backed by recurring annuity-driven cash flows; management expressed confidence in maintaining this level going forward.
• Interim distribution mechanics: An interim distribution of ₹1.45 per unit was paid from an annuity due before December but received in January after a few days’ delay; the residual portion from that project is being distributed now.
• Total return positive since IPO: Management noted that total return, combining unit price and distributions, remains above the IPO price of ₹99, even as the unit price has declined.

Hare Krishna: "we are looking at a cash yield of 11%-12% going forward. And the way we look at is that based on the current portfolio and the cash generation capability of the assets, we are quite confident of maintaining this"

Acquisitions & AUM Growth

• Three ROFO assets closed at a discount: Jodhpur Ring Road, Hasanpur-Bakhtiyarpur, and Champa-Korba were acquired at a 9.3% discount to adjusted enterprise value, expanding AUM 57% to ₹6,733 crores; all are operational and immediately cash-flow accretive.
• ROFO pipeline mapped through FY29: Seven ROFO assets are expected ready for acquisition by FY27, with another seven likely by H1 FY29; due diligence on two will begin in Q4 FY26.
• Third-party strategy launched: Management is evaluating third-party HAM-based road assets, currently in the screening stage and in discussion with multiple parties; it plans to acquire 2 to 3 such assets by FY27, targeting an IRR of 11.5% to 12%.
• Construction quality flagged as key risk for third-party deals: Management stressed caution on inherited construction quality, since acquired assets must be maintained for another 13 to 15 years; the sponsor will be engaged as project manager even for third-party assets to ensure consistency.
• No assurance on future acquisition discounts: While management will negotiate for discounts, it cannot assure transacting at 9% or 10% below enterprise value going forward, citing market conditions.
• Medium-term AUM target of ₹9,000 to ₹10,000 crores: The plan is to scale to 17 assets by next financial year, adding at least 4 to 7 assets, funded by a mix of equity raises and debt at a preferred 55% to 60% financing ratio for fresh acquisitions.

Hare Krishna: "for third-party assets we need to be really cautious about the quality of construction because these assets which we inherit, we will have to maintain for another 13 to 15 years."

NAV & Capital Structure

• NAV rose to ₹72.31 per unit: The 7.2% QoQ increase was driven by accretive acquisitions and deleveraging; the ₹60.6 crore GST CIL indemnity claim from NHAI is not included in reported NAV.
• NAV decomposition provided: Acquired assets carry an NAV of ~₹85.1 per unit, while the portfolio NAV stands at ~₹65.4 per unit; the preferential issue of ₹345 crores used to repay debt nominally increased NAV.
• Management declined to forecast FY27 NAV: When asked how NAV would trend with two more ROFO assets ready, management said forecasting is difficult because it depends on negotiation with sellers and the price of future equity raises.
• Debt rationalized by ₹420 crores: Prepayment was funded through the unit capital raise and internal accruals; fresh borrowing of ₹1,100 crores at 6.85% PAPM financed the ROFO acquisition.
• Effective interest rate falling 47 bps: The rate is expected to drop to 7.35% by March end from 7.82% in September 2025, driven by refinancing of ₹933 crores of debentures at 6.85% PAPM through a mix of retained NCDs and new term loans from two banks.
• Leverage target held at 45% to 47%: Net debt-to-EV improved to 43.34%; management will maintain this range in the medium term absent new acquisitions, but will seek unitholder consent and reassess the long-term ratio for ROFO acquisitions, with the ability to enhance leverage up to 70% post-June 2026 after six distributions.

Profitability: Two Different Pictures

• Consolidated net profit fell to ₹11 crores: The decline from prior quarters was driven by a modification loss recorded in Q3 FY26 that reversed a modification gain booked in Q2 FY26, inflating operating expenses; Q2 had benefited from the gain, making the QoQ swing appear severe.
• Standalone performance was clean: Standalone EBITDA was ₹128 crores and net profit ~₹85 crores, reflecting the direct flow-through of incremental treasury and SPV income to the bottom line without the accounting noise.
• Tax outflow remains minimal at the standalone level: Distributions from SPVs to the Trust are tax-free; tax is payable only on treasury income.
• Maintenance capex is planned, not a surprise: Two major maintenance cycles are already planned for each project across the 15-year concession duration.

Portfolio Operations & Claims

• Operations stable across 12 NHAI projects: All 12 projects have concession agreements with NHAI, which maintains a detailed monitoring process with independent engineers and officials; road quality remains robust.
• Claims status: For seven older SPVs, initial claims have received NHAI approval; residual amounts of ~₹60.6 crores were indemnified by the sponsor but not yet approved by NHAI, and the indemnity will be raised to sponsors.
• Claims upside not in guidance: The ₹60.6 crore claims amount is not budgeted in current cash yield projections; management said estimates will be modified and included when the amount is due, representing potential upside.
• New acquisitions already contributing: All three projects acquired in December are operational; one project’s annuity has already been received, with the other two annuities, which are semi-annual, due in subsequent months.

Market Context & Growth Outlook

• RBI rate cycle largely played out: Management assessed that the substantial part of the rate-cut cycle is complete, with only nominal cuts possible from here, and a rate-up cycle potentially returning in a year or two; this view underpins the yield guidance reset.
• HAM pipeline seen as ample: Over 100 HAM projects are nearing completion in the next two years, including 14 projects with sponsors plus projects with third-party developers, providing enough acquisition opportunity in the medium term of one to three years.
• NHAI bidding expected to increase: Budget allocation to the road sector has increased, and NHAI is expected to bid out more projects in coming quarters.
• Structurally stronger growth phase claimed: Management pointed to optimized leverage, lower borrowing cost, and immediate contribution from new assets as creating a solid base to scale further.

Hare Krishna: "with optimized leverage, lower borrowing cost, and immediate contribution from our new assets, which gives us a solid base to scale further, we see a structurally stronger growth phase for Capital Infra Trust in days to come."

Guidance & Commitments

Key Metrics