CAPITALINFRA — earnings call

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Prepared remarks

Unattributed

GROWTH | GOVERNANCE | GOAL

“Capital Infra Trust

Q4 & FY26 Earnings Conference Call”

MANAGEMENT: MR.

HARE KRISHNA — CHIEF EXECUTIVE OFFICER

AMIT KUMAR — CHIEF FINANCIAL OFFICER

Hare Krishna

Ladies and gentlemen, good day and welcome to Capital Infra Trust InvIT Q4 & FY26 Earnings

Conference Call, hosted by HDFC Securities.

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

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

T now hand the conference over to Mr.

Aditya Sahu from HDFC Securities.

Thank you and over

On behalf of HDFC Securities, I welcome everybody to the Q4 & FY26 Earnings

Conference Call of Capital Infra Trust.

We have from the management Mr.

Hare Krishna, Chief

Executive Officer, and Mr.

Amit Kumar, Chief Financial Officer.

I now hand over the call to

Hare and the management team for their opening remarks, followed by the Q&A session.

Over to you, sir.

Thanks, Aditya.

Good afternoon, everyone, and thank you for joining us today.

I am pleased to

share that the Trust has delivered a strong performance for the quarter, led by positive

contributions of

3 recently acquired SPVs, timely receipt of eight annuities aggregating to INR

407 crores, additional inflow of INR 112 crores as change in law claim from NHAL stable

routine operations of 12 projects, lowered cost of debt by refinancing external borrowings of

INR 2,000 crores at 6.85%, and receipt of around INR 66 crores from the sponsor towards

indemnity payments.

As a result, the Trust closed the quarter with a net debt ratio of 40.9%, improved NAV to INR

74.7 per unit, and a quarterly DPU of INR 2.4 per unit.

While Amit will discuss our financial

performance in detail, I would like to briefly emphasize our business strategy, which is to operate

operational infrastructure assets in a risk-averse manner, which generates predictable

distributions for unitholders.

As such, we intend to continue to operate in annuity-based road assets, which have no external

dependencies like traffic or toll rates, and have predictable revenue streams.

Secondly, we intend

to maintain a mix of fixed-rate debentures and floating-rate rupee term loans to diversify our

Our anmuity profile is linked to bank rates, which provides a natural hedge in a

rising rate scenario.

On the cost side, a significant portion of our expenses is structured through fixed-price or well-

defined contracts, which limits inflationary impact and supports margins.

Growth is driven ina

standardized manner through a combination of ROFO assets from the sponsor and selective

third-party acquisitions, while maintaining asset quality, valuation discipline, and conservative

Consequently, even in the current market volatility, our operations continued uninterrupted as

per the business plan, with no adverse financial impact on our inflows or outflows.

foresee any impact on our financials in FY27 due to our long-term contractual framework for

revenues or expenses.

Capital Infra Trust

Moving on to FY26 financial highlights, our AUM grew by 42% year-on-year to INR 6,611

crores from INR 4,668 crores, driven by disciplined portfolio expansion.

acquisition of 3 HAM assets added INR 2,570 crores of enterprise value at a 9.3% discount to

intrinsic value, and increased our portfolio to 12 operational HAM assets.

During the quarter, we optimized our external borrowing by refinancing and raising external

debt of INR 2,000 crores at 6.85%.

Rationalized additional fund raise, coupled with debt

repayment of INR 108 crores from our internal accruals, has optimized our debt ratio to 40.9%.

This has improved the cost and structure of our borrowing and enhances cash flow efficiency.

Importantly, this provides headroom to fund acquisitions through debt, reducing reliance on

equity issuance and limiting dilution.

As of March 126, our effective annualized interest rate was 7.33%, which has further reduced to

7.24% currently, and we will continue to optimize our blended cost of debt through active

As a consequence, our NAV increased from INR 72.3 per unit in the last quarter to

INR 74.7 per unit.

The improvement has been largely on account of

a reduction in bank rates,

lower cost of debt, receipt of outstanding claims from NHAL and indemnity inflows from

Going forward, our focus remains on stabilizing NAV through disciplined underwriting,

attractive acquisitions, and continued refinancing.

We also note potential upside not captured in

the reported NAV, with the GST CIL indemnity value of INR 24 crores expected by Q2 FY28.

Additionally, we remain optimistic on our acquisition-led growth strategy.

During the quarter,

our sponsor's ROFO pipeline pool has increased by three assets to 17 assets.

Looking ahiead to

FY27, we have strong visibility through our sponsor-backed ROFO pipeline with eight assets at

advanced stages, and we are targeting acquisition completion around Q3 FY27, subject to

approvals and closing conditions.

At our current AUM base, this pipeline, along with our discussions for third-party assets,

provides clear growth potential and supports our trajectory towards the INR 10,000 crores AUM

target in FY27.

Beyond FY27, additional ROFO assets provide multi-year growth visibility,

supplemented by selective third-party acquisitions where valuations are compelling.

Finally, on distributions, FY26 delivered a cash yield of 13.1% based on the unit price as of

March, 2025, with total distribution of INR 11.6 per unit.

For FY27, we are providing DPU

guidance of INR 9 to INR 9.25 per unit, translating to an expected cash yield of 13% to 13.5%

based on the March 26 price.

This guidance is supported by asset-level annuity cash flows,

disciplined cost and reserve management, and continued optimization of our cost of debt.

Overall distributions remain predictable, sustainable, and are backed by recurring cash

generation rather than one-offs.

I will now hand over to Amit to take you through the financials in detail.

Thank you, Hare.

Good afternoon, everyone.

I will take you through the key financial updates

for Q4 FY26 and FY26.

Coming to Q4 FY26 performance on a standalone basis, total income

for Q4 FY26 was INR 259 crores, vis-d-vis INR 129 crores in Q3 FY26, driven primarily by

Moderator

higher dividend inflows from the SPVs contributed by newly acquired assets and a certain

portion of treasury income.

Interest income on loans extended by the Trust to SPVs stood at INR 146 crores during the

quarter, compared to INR 102 crores in the preceding quarter.

The increase was primarily driven

by incremental debt on-lent to SPVs acquired during the December quarter, totalling INR 1,780

On a standalone basis, standalone EBITDA was INR 257 crores, and net profit was

approximately INR 253 crores for the same quarter.

During Q4, the Trust raised fresh term debt of INR 1,750 crores at a pricing of 6.85% per annum,

which was utilized primarily towards refinancing of existing debt of INR 1,100 crores in newly

acquired SPVs and redemption of dissenting NCD holders to the extent of INR 650 crores.

Further, pursuant to the annual reset due in March 26, the coupon rate on one of the series of

NCDs was revised downward from 7.6% per annum to 6.85% per annum, effective March 5,

For FY26, the Trust reported total income of INR 790 crores, EBITDA, which is exclusive of

impairment loss booked, is of INR 784 crores, and closed at a PAT of INR 285 crores, which

also included interest from these freshly acquired SPVs in December 2025.

The impairment is

on account of the difference in fair value and the book value of the investments.

On a consolidated basis, total income for Q4 FY26 was INR 345 crores, compared to INR 182

crores in Q3 FY26, reflecting stronger contribution from the expanded portfolio.

improved to INR 282 crores, and net profit stood at INR 195 crores, reflecting normalized

performance compared to Q3 which was impacted by modification-related adjustments.

During Q4, the sponsor indemnified the Trust for an amount of INR 66 crores pertaining to

expected short receipt from NHAI towards the agreed GST CIL amount at the time of SPA

executed during the IPO and certain amount was due to a change in expected inflows at the SPV'

Moving to distributions, as Hare already mentioned, the board has approved a distribution of

INR 2.40 per unit for Q4 FY26, translating into a payout of approximately INR 118 crores.

form of distribution is INR 0.9 per unit as interest, INR0.63 per unit as dividend, INR 0.7 per

unit as capital repayment, and INR 0.01 per unit as other income.

The record date for the said

distribution is May 22, 2026.

At the standalone level, tax outflows remain efficient as distributions from SPVs continue to be

largely tax-free, with taxes primarily attributable to taxable treasury income only.

we are shifting the payment of investment manager fees from the project SPVs directly to the

Trust versus the project SPVs earlier in line with industry practice.

Further details are available

in our investor presentation.

We can now open the floor for questions.

Questions and answers

Moderator

Thank you very much, sir.

We will now begin the question-and-answer session.

is from the line of Sarvesh Gupta from Maximal Capital PMS.

Please go ahead.

Sarvesh Gupta

Hi, thank you for the opportunity.

Sir, one broad question I wanted to understand on your DPU.

So, we have seen a very checkered past in terms of how we have gone about distributing every

quarter, unlike all the other InvITs in the industry.

Now, this time also we see this cash yield sort

of a figure which is a new spin on the numbers.

So subject to SEBI NDCF guidelines, but because you are repaying some debt etc also to

optimize your balance sheet, what is the framework that you have right now to sort of do the

DPU for every year from here on?

Because honestly speaking, we have seen too much volatility

in the way you guys have handled this.

Yes, so on the DPU part, just to explain a little bit further, as we have discussed in previous calls

as well, post-IPO of Capital Infra Trust, the initial distributions were large, they were largely on

account of the fact that there was cash with the Trust, along with the IPO, which we had

distributed initially.

Thereafter, our operations are pretty much stabilized right now, and now we

have quite predictable cash flows ahead of us.

In terms of our operations, We receive our anmuities twice a year, However, we need to incur

operational costs on a monthly basis for the project manager, and we need to fund our interest

outflows for the principal repayment and interest costs as well.

Therefore, we need to create

reserves on a quarterly basis to meet the expenses at the project SPV level and to meet the debt

Beyond that, we are not creating any other different type of reserves.

Therefore, from an NDCF perspective for this quarter, we have arrived at an NDCF of INR 118

crores, which translates into a DPU of 2.4.

For the last financial year, for the moment, if

go into the cash yield if

I were to talk about the DPU only, we distributed INR 11.6 crores in

FY26, including the 2.4 which we will be doing ina week’s time.

And for the next financial year,

we are looking at a guidance of

@ to 9.25 which are largely based on the revenues which we will

be receiving from our 12 SPVs, taking aside the operating expenses and the budgeted debt

Does that answer your question or you have further.

I had one clarification.

So even if we are now saying that, okay, Q4 was a stable quarter, but

next year's guidance is below what we are distributing for Q4 also, right.

FY27 run rate is lower

So, when are we achieving that stable sort of a DPU?

Will you say from Q1 onwards

we will achieve that, and from there on it would be stable to increasing sort of a DPU only or

will there be further volatility in that?

Even if you look at, right now for the next financial year, we are having 9.2, which translates 9

t0 9.25 guidance which we have given which translates, quarterly basis to 2.3.

This quarter we

have given 2.4.

So therefore, I would suggest its a similar range.

I would not say there is too

much variation in this aspect.

That's what I would like to summarize.

So now everything is settled in terms of the optimization, capital reflows being high, and now it

should be a stable and increasing trend as far as your DPU is concerned?

Capital Infra Trust

Hare Krishna

So right now, the forecast which we are providing, that takes into account the cash flows

from the 12 assets.

Additional thing which I would like to put forward is, very shortly after the

June quarter, once we make the six distributions, we would be eligible to enhance our leverage

Right now for us, the debt leverage is limited to 49%.

Post the June distribution, we would be eligible to enhance it to 70%, which will permit us to

undertake acquisitions of one or two assets through external debt itself.

For instance, we can

easily acquire assets of INR 900 crores to INR 1,000 crores just by raising external debt and

remaining compliant with the SEBI norms altogether.

This will not require any further equity

Our equity base will continue to remain the same, and this will be further accretive to the current

So therefore, the guidance which we are giving right now for FY27, is in the range

9 0 9.25, this is again going to increase by at least 10% in FY28, based on the factors which

I mentioned with you right now.

The second positive factor in our portfolio would be that we have annuity-based inflows.

Essentially, this is linked to the interest rates set by the RBI and the RBI bank rate.

in FY28, if interest rates are to go up, this will further increase our inflows and will help us in

improving the guidance for FY28.

Sarvesh Gupta

So, in FY27 also, there could be some partial positive impact of asset acquisition, right?

a possibility that you will have that in the FY27 DPU as well?

Hare Krishna

The current forecast, which we have given, is based on the 12 assets.

So, our objective is

to complete acquisitions or undertake acquisitions by Q2 or Q3.

Therefore, in FY27, there could

be a positive impact of new acquisitions.

Sarvesh Gupta

Within the DPU, sir, the other thing which is very volatile is the way the DPU has been

given, so from QI, where 100% was capital repayment to Q2 where it was 0%.

have also undergone a complete reversal over the quarters.

So, how do we look at this, because

this determines the taxability of the various distribution heads?

Will it be stable going forward?

Hare Krishna

In the current DPU, of 2.4, around 0.78 is non-taxable, primarily because it's a return of

Even if collectively, I was to look at FY26 then around 40% of the distribution was non-

For FY27, this would be somewhere in the range of 25% to 30%, primarily driven by

the return of capital.

It may be staggered over the quarters because of accounting treatment and

things like that.

But overall, in the financial year basis, it would be around 25% to 30% which

would be non-taxable.

Sarvesh Gupta

And that should be stable quarter-on-quarter or will it be as volatile as what we have seen in

Hare Krishna

It would be stable only, but what I'm coming at is that there may be the configuration between

payment of interest, dividend or retum of capital may vary from quarter-to-quarter.

financial year, it will remain as per the targets we are talking about.

Sarvesh Gupta

Secondly, on your NAV, now we have already reached 40% debt limit, and as you said

that we are close to the limit.

But again, after some time, we will get further limit of debt.

now your sponsor has a large pipeline.

So how do we plan because here now, what has also

happened that you are trading at a discount to NAV.

So, every time you raise money, you are

diluting the NAV also.

So, what will be your guidance on how you would want to treat your NAV itself?

raising money, because you will have to raise money eventually, and if that is dilutive for NAV

like how do we look into that?

1 take your question.

So, there are two parts to it.

The first part is the NAV has improved from

the acquisitions which we took in December, because they were at almost a 10% discount to the

fair market value.

It helps us in strengthening the NAV per se.

But having said that the equity

capital raise does increase the base of the unitholders, and that does have a dilution impact.

Going forward, at least for FY27, we are cognizant of this aspect.

When we are funding the

future acquisitions through debt, therefore there is no additional unit being issued, and therefore,

it is accretive to both the unitholder, existing unitholders and the NAV growth as well, which

we will try to achieve by December 2027.

With regards to the equity capital raise, we will try to minimize so that for existing unitholders,

overall retun s accretive and they are benefit from the acquisition rather than any dilution over

So that’s our plan.

If there is any dilutive impact then we will not go for equity raise at all.

That's our plan.

So, sir, where I was coming from was basically, I think we were able to increase the NAV despite

fundraising at a lower valuation, because the sponsor was able to sort of give the assets to us at

a discount to fair value, which you alluded to.

Now, going forward, is the sponsor in line with

that thought process that there should not be any NAV dilution, and hence we have to sort of

compensate on the transaction value of the future assets from the ROFO pipeline to encapsulate

that, because we might have to raise money at a discount to NAV?

To answer your question, say, right now for future acquisitions, we are yet to undertake dilutions,

and yet to go through our board consent and even unitholders' consent.

But as a practice, even

for third-party acquisition, we are going to negotiate and have some discount to the market value.

We would avoid acquiring assets just at market value itself.

We will always go and negotiate

and have some discount on the fair market value.

The quantum of discount may vary from deal-

to-deal that’s something we won’t be to confirm today, but we will ensure that there is some

discount to the fair market value.

And how do you see that market, sir, for third-party acquisitions because you might be looking

into various opportunities.

Because, the other thing which is happening is, there is a lot of

fundraise across private and public InvITs.

A lot of [POs are coming on.

So, there is a lot of

capital that is there, and everybody has to acquire to grow and all that.

So, given that, apart from

‘your sponsor assets, are you able to find third-party assets at reasonable valuations in this sort

Hare Krishna

See, I think a third-party asset is always challenging, not only you need to look at the financials;

you need to look at the quality as well, because you would be undertaking a long-term contract,

and operational maintenance is your responsibility.

Having said that, there are multiple players even today more than, I would say, 15 to 20, who

have been allotted HAM project over the last two to three years which are ready, and they are

going to transit.

The competition in terms of capital providers is there.

There are multiple players

looking to seck or acquire such assets.

However, we also have a strong ecosystem among road players and we have identified a few

We are in discussions with them.

And that is something we will update the group on

once we reached the stage and once, we have concluded some binding discussions with them.

Sir, your costof...

Sorry to interrupt Mr.

May we please request you to rejoin the queue, sir, for the follow-

Next question is from the line of Dishant Garg from Edelweiss AMC.

Thank you for the presentation.

Sir, my question is on the

Dishant, your voice is very low.

Please use your handset.

AmT audible now?

Please go ahiead.

So, my question is on the rigid construction, where you stand at 35%.

Any plan to increase the

rigidness on the construction quality, because of increased O&M expenses given the cusp of

Do you have any plans because as I can see in the presentation as well and I have

discussed with multiple analysts, it does not have a major impact given your O&M has been

contracted as and when it gets converted into an asset into the InvIT.

But will that also have an

impact on the O&M contract pricing going forward?

To answer your question, we do have around, as of now, 35% of our portfolio having rigid

Your assessment is correct that in rigid the annual operating expenses are less.

However, during the course of the project, you can’t change this.

These are something which are

designed and approved by NHALI at the beginning of the project.

Even in a project, on a selective basis for a certain portion, NHAI keeps on coming with design

upgrades more from safety and other parameters and does issue a change of scope and does

undertake such work.

But we cannot unilaterally go ahiead and ask NHAI to make that change.

This is at NHATs discretion, and we have to abide by the concession agreement.

Having said that, our framework is beneficial for the InvIT.

For operations and maintenance, we

have given a fixed-price contract to our project manager.

Therefore, despite the volatility in

bitumen prices or commodities or vehicular movement, which is going on right now, our cost

does not get impacted at all.

Our cost remains the same, which is fixed as of today.

So therefore, I understand your point of rigid versus flexible, but this does not impact our

business plan or future operations negatively at all because we are operating on a fixed price

And what about the cost going forward on the O&M contracts?

So even the O&M contracts, the value has been finalized for the entire tenure of the concession

So therefore, whatever is the fixed amount and we are not foreseeing any deviation

whatsoever from the amount we have budgeted.

Next question is from the line of Ankit Tripathi from Kotak.

Please go ahead.

Please go ahiead.

The good set of numbers.

I have a few questions.

On the growth aspect, ifI look at your

ROFO pipeline, Hare can you please explain how much amount or on a ballpark basis, if you

have to acquire ROFO assets from your sponsor, what value would that be since we have a

decent amount of ROFO pipeline?

So Aunkit, there are around 17 ROFO assets right now.

And around 8 of them will acquire

completion status in FY27 itself.

We have not gone in very entire detail of the valuation of these

As of now, the collective BPC of the projects, which are there.

See the 8 assets which would be

ready in this financial year, their BPC is around INR 7,100 crores.

Depending upon the diligence

and unitholders approval, we would be targeting to acquire at least 4 to 5 of them, depending

upon the diligence outcome and how we progress.

So we haven't gone into the exact enterprise value of that amount right now, but to answer your

question, the gross BPC for these 8 projects adds up to INR 7,100 crores.

And in BPC essentially

what happens is that at least 40% of the amount has already been received by the developer from

NHAL so only 60% of the value remains and this further increases based on the inflation index.

When we were speaking about the third-party asset acquisition, so just from an acquisition

standpoint, if we look at, the IRR of the project which you will be acquiring, will that be value-

accretive versus a sponsor asset, or will it be in line with your sponsor assets?

I would say, from a trust perspective, the IRRs which we would be acquiring, even for third-

party assets which we are targeting, a lot depends upon what kind of indemnity we are getting

from them and how we are fixing the risk associated with that.

Ankit Tripathi

If we are able to box them completely and eliminate the entire indemnity risk altogether, then it

would be similar to sponsors.

But if there is a certain risk which we have to assume going

forward, then we would be seeking some premium over there.

To summarize, we would be

targeting IRRs of around 12% for future acquisitions.

T look at poster QIP, the distribution seems to have stabilized and you have

given a guidance of 9 to 9.2 for FY27.

I have to look at your current portfolio, let's say,

for another maybe the next two to three years of cash flows, the distribution should be ballpark

at least would be in this range?

Yes, definitely.

Even this year we are foreseeing distribution of 9 to 9.25.

Thereafter, we will be

able to have at least 10% growth in it, backed by the acquisitions which we are foresceing

Sorry to interrupt.

So I'm saying excluding growth, so growth is there, that lever will come, you

can acquire from debt, because now you are at 40%.

So what I'm saying is, if

| look at our current

portfolio of 12 assets and the cash flows from these assets.

So this INR 9 to INR 9.2 the guidance

which you have given, that s based on the cash flow of these 12 assets, right?

included any, let’s say, acquisitions of asses.

That s correct.

This guidance is solely based on the 12 assets.

Growth aspect is separate.

I understand that.

So that is separate.

I just wanted to understand,

because obviously the past cash flows have been volatile, and incrementally, we are looking at

stabilization of cash flows for the last two quarters, and you have done some debt repayment

which seemns to be in line.

Ifat all from the current assets which we have right now, the trajectory

of cash flows for the next two to three years maybe, will this number hold for the next two to

Yes, absolutely.

If you look at slide 24 of the investor presentation, in the guidance we have also

categorized the annual inflows which we are looking at.

Even in the current guidance, we are

assuming some reserve as well, which s essentially, if we are to repay any debt, any major

maintenance, which we have to budget for.

Therefore, we are quite confident of achieving this

guidance for FY27 based on the cash flows of the projects.

And since you mentioned about the maintenance reserve, just want to understand, how

many of our assets we would have started commencing major maintenance work?

For one asset, a major asset we would be doing this year.

The other assets, they would start in

over the next two-three-year cycle.

So right now, only one asset we have done MM?

One asset, we would be doing this financial year, FY27.

So altogether, for FY27, we have major

maintenance target of INR 170 crores.

Just to be clear on the guidance which you have given right now, you do not

have factored in higher bank rates, because there are news around that the bank rate might

So this is based on the current bank rate, right?

Moderator

This forecast is based on the current bank rate of 5.5%.

So that's an additional upside as and when cycle moves on.

Sir, thank you.

That's it from my side.

Hopefully, the trajectory continues, and all the best.

Thank you, Ankit.

Next question is from the line of Priyam Poddar from Value Equity.

Please go ahead.

Sir, good afternoon, and thanks for the opportunity.

T hope my voice is audible?

Yes, you are audible.

Please go ahiead.

Thank you so much.

Sir, just one question.

As we are targeting an AUM of close to around

INR 10,000 crores by the end of FY27, could you provide some insights into the key drivers that

will help you achieve this milestone?

And additionally, how strong is your growth pipeline for

So, we are looking to expand the AUM to around INR 10,000 crores by FY27.

our AUM is around INR 6,600 crores as of 31st March.

So, we are looking to acquire at least

INR 3,500 crores of assets over the next 12 months, which is largely backed by, we have a pool

of around 8 assets from sponsors, which would be ready for FY27.

Of that, around 5 to 6, we

are looking to transact in FY27.

So that's one pool which is available, which, as I explained

carlier, we have not got into the enterprise value of those assets right now because we are yet to

undertake diligence.

The second pool is the third-party assets.

So before moving to third-party assets, the sponsor

assets itself would help us in achieving the target of INR 10,000 crores.

So INR 10,000 crore

guidance does not include third-party acquisitions.

If we are to acquire third-party assets, it

would further increase the base further additional to that.

The way I mentioned earlier, we have around 17 ROFO assets.

They could be maturing over the

next two to three years from today.

Around two assets, they have been allocated recently, which

are yet to be the concession agreements are et to be finalized, which should eventually happen.

And even for that, there will be a development cycle of around two years per se.

So therefore, every year, we would have some assets from the ROFO, from the sponsors, which

And third-party acquisitions is equally important for us that also we are going to

pursue, and we are pursuing right now as well.

Next question is from the line of Manoj Bagadia from Equicorp.

Please go ahiead.

Hare Krishna

Sir, can you hear me?

Yes, please go ahead.

Sir, my first question is you mentioned about the IRR of 12% for the acquisition, either

from a sponsor or from the third-party assets.

So, is this at a project level?

Or is this at the trust

level that we are talking about?

So, 12%, what I was referring to, that's at the project level and not at the trust level.

your question, the 12% IRR refers to when we are acquiring projects from the sponsor or third

party, keeping aside the diligence findings, this is the base IRR we expect.

Line for the current question got disconnected.

We'll move to the next question from the line of

Anant Mundra from My Temple Capital.

Please go ahead.

Hello, am I audible?

Yes, please go ahead.

Thank you for the opportunity.

Sir, I just wanted to get some understanding more

So, while you've mentioned that INR 9 kind of payout every year can be taken

But on the NAV side also, can we assume INR 75 to be the base and in future, this

number would only go up?

See, NAV for 3 1st March was INR 74.7.

Our asset base is annuity linked, which essentially

what happens is as and when we receive the annuity, then the future cash flow reduces because

the future stream of pools, which is there, that's fixed and that reduces.

And therefore, as and

when we move up, there is a benefit of the time lag, but the annuity receipt reduces the NAV.

However, say, going forward, we are looking for the acquisitions as well without diluting the

equity base partially by increasing the debt that will support it in maintaining it at similar level

without diluting the returns or the NAV altogether.

So to answer your question, if we are not to

acquire any asset altogether in future, then the INR 74.7 will gradually drop because of the nature

of the asset profile which we have.

So that would gradually drop.

That's understandable.

But in that case, the payout should also go

above INR 9, right, because then you will be returning capital as well.

I have to sustain it at a

INR 9 over INR 75, I mean, is that understanding correct?

INR 9 by INR 75 is about 12% IRR,

like you mentioned, is the kind of return that you expect to deliver to sharcholders?

Yes, absolutely correct what you are summarizing.

So therefore, what I am coming at is that if

we are to discard any acquisition that we will do in future, if that was not a possibility, then the

NAV will drop and we can't stop it, then we will have to look at it differently.

But we are going

to acquire assets in FY27 itself.

So therefore, on a combined basis, as of now, what can convey based on our pipelines, which

we have and our current debt ratio, which we have, that the NAV will remain at a similar level.

And in addition, we would be able to make distributions INR 9 distribution.

Sorry to interrupt, Mr.

Mundra, your voice is not clear.

It is very low.

AmT audible now?

Yes, please proceed.

S, i, the rupee term loan that we have is linked to T-bills, whereas the interest on anauity that

we receive is into repo.

So there's a bit of a mismatch here.

So just wanted to understand why

have we chosen a T-bill linked loan?

So we were cognizant of that.

Now every bank has their own external benchmarks, and

that is not negotiable.

Having said that, we have picked it.

See that specific zone has turned

favourable for us.

We took it at 6.85%.

Right now, it is at 6.63% as of today.

There is a benefit

of around 22 basis points on that zone.

So I understand that 3-month T-Bill is not 100% aligned

with repo, but it's similar.

Therefore, we have picked this.

And we don't foresee too nuch of

volatility in future.

I mean, so that's the one aspect.

And second part is that right now, we have approximately INR 2,900 crores of debt.

intention would be to ensure that around 30% to 40% is through debentures of varying tenor and

the residual is floating rate.

And even in the floating, we didn't want to go for G-Sec linked

because there is a higher volatility.

We wanted to have a mix of repo and 3-month T-bill.

what our plan was.

So sir, this interest rate is reset quarterly or its biannual or annual on the T-bill

For T-bill, i's quarterly.

For the other facility, it' linked to movement in the repo rate but even

that's quarterly.

And sir, one final question.

There was some change in law claim that resulted in some

receipt from NHAI this quarter and also some sponsor indemnity receipts.

Now are these kinds

of one-off gains that we've received or these were already a part of the cash flow projections that

the value had accounted for earlier?

See, for the GST CIL claim, the two SPVs, which we had acquired in December, our initial

budget was that this cash flow would come by September 2027, but we have already received

the amount from NHAI prior to our initial budget.

These are onetime items.

This inflow s not

recurring in nature.

This is onetime, and that has improved the balance sheet of the trust, and it

was expected as well in the valuations even earlier as well.

With regards to the sponsor indemnity, there were, again, two types of indemnities which were

raised in the last quarter, one pertaining to a change in law claim in the four SPVs, which were

acquired at the time of IPO itself.

And the second claim was pursuant to in Nainital project,

which was pursuant to NHAI descoping certain part of the project from the project and

categorizing it as a change of scope.

Therefore, whatever was the variation in our future cash

flows that we have adjusted and took indemnity from the sponsor.

Thats it from my end.

Next question is from the line of Manoj Bagadia from Equicorp.

Please go ahiead.

Thank you for the opportunity, sir.

Im sorry earlier it got disconnected.

Sir, my first question is

you mentioned about IRR of 12% as a hurdle rate for new acquisitions.

Is this at a project level?

Or is this at a trust level?

Because at trust level, 12% IRR means project level IRR would be

much lower because of the debt financing?

So I think you got disconnected earlier.

What I was referring to is that this is 12% is a project

level IRR, which we are talking about.

Trust level IRR impacts are different because it's linked

to any equity dilution or no and at what price the new equity comes in.

So what I was referring

to is the project SPV IRR of around 12%.

Thank you, sir.

My next question is, sir, you mentioned about FY27 major maintenance

cost, 1 project, INR 170 crotes.

Can you also tell us about next three to five years annually, how

much would be the major maintenance cost and which year it will hit in total for all projects?

See, that part we will have to collate and we will get back to you separately because in cach

project, every six to seventh year, we have budgeted the major maintenance.

And we can share

it with you separately.

But right now, I don't have off hand.

The thing why [ asked that question is, sir, because if it bunches up together in, say, two, three

years' time in a single year for multiple projects, then it could affect our cash flow and maybe

the potential payout.

So that is why I was just trying to understand, if

I look at payout for next

three to five years, do you see any significant impact on a particular year from the major

So recently, even SEBI has revised the rules, and they have now permitted InvITs to avail debt

to fund major maintenance.

This was a pain point carlier that if four, five projects major

maintenance are to be undertaken in a year, then this could impact the cash flows.

we are cogaizant of this aspect.

For our portfolio, the bunch is happening three or four years

from today, not in the near term.

And we are planning it out, and we are accordingly looking at the debt repayment schedule and

other things as well so that the distributable cash flows remain consistent, and they do not vary

Just to answer your question, for example, for FY27, our major maintenance is INR

InFY28, it's around INR 90 crores, FY'29, it's INR 100 crores and FY30 around INR 140 crores.

So even in our portfolio because a few of the assets are of different age profile per se, therefore,

it's getting segregated across the year.

And sir, when I look at the guidance we have given for next year, INR 9 to INR 9.25,

will it be similar across four quarters?

Or there could be variation within the quarter actually in

terms of the payout?

So there could be minor variation across the quarter, but not too much because our annuities

comes one in six months.

Therefore, there can be minor variation, but not too much.

And sir, like some of the InvITs who have given medium-term guidance also.

possible for us to give guidance for next three to five years, saying that whatever is the minimum,

like whatever INR 9.25 will maintain and maybe some increase per year?

See, we can target that, but we would have a better accuracy in talking about one year.

therefore, we are limiting it to a one year guidance right now.

We note your inputs.

work towards it, and we will look into if we can provide a little bit medium-term guidance going

Because that will add a lot of confidence actually to the investor.

Right now, we are not very

clear as to how it will behave actually in the medium term.

Although the cash flow is pretty

And even asset addition plans are quite stable.

So, if there is a confidence, the

question is, you will have to dilute significantly going forward in the next three to five years, if

you have to add assets, especially just even sponsor assets, forget about third-party assets.

So, if you dilute at a higher level, like one of your peers have done it, came out with INR 100

IPO and today, they are at about INR 165-170.

So, there has been capital appreciation and they

have done dilution at higher levels also.

So, if that happens, then it will add significantly to the investor confidence.

As of today, we are

not sure the dilution that will happen.

Will it happen at the same level what we did last time,

higher level or even at a discount to the current level?

Because a lot of players are eying for the same capital, InvITs and REITS.

So, if you have to

compete in that, I think there would be a strategy in our mind, I mean, if you can talk about it.

I noted your feedback.

We understand what you are highlighting at.

Just to come over here, even

we are quite cognizant of we don't want to dilute our existing unitholders.

provide preference to them.

And our endeavor would be to have some more value creation right

Then only go for substantial fundraising or anything.

That's our plan going forward and that's

what we are working on at this point of time.

So, we take your feedback and we will try to look

into some medium-term guidance from subsequent discussions.

Next question is about the addition of about INR 3,500 crore in current year.

When you do it in

Q2 or Q3, at that time you would have finished six quarters of quarterly payments.

are eligible for up to 70% and right now we are at 40.

And ifI do backward calculation, then out

of INR 3,500 crore, I mean, you can fund literally most of it through debt or maybe at least you

need basic capital of between INR 500 to INR 1,000 crores on the equity at best.

So, is it the strategy that you will try and fund it mainly through debt and try to improve the

value first and pay out for next year also?

And then you go for the dilution next year when you

need more capital?

So, that's what T was trying to hint earlier as well.

See, post-June, we would be able to raise our

debt level beyond 49% mark.

We don't intend to go straight away to 70.

We would target

somewhere around 57.5 to 60 because it would be a range given the nature of the asset class.

And definitely our objective would be to minimize the equity dilution so that the existing

sharcholders are benefiting more instead of going for a larger equity raise in FY27.

objective and that's what we are working towards.

And my last question, sir, is about the NAV value as well as the annual cash flow.

interest rate sensitivity if it goes up by, say, 25 basis point?

What will be the impact on NAV

because it will affect our valuation and weighted cost of capital also.

So, what s the impact on

NAV as well as on the cash flow?

Because you mentioned that cash flow, it is positive, right?

But at the same time, our cost will also go up, interest cost will go up.

So, net impact on the

annual cash flow as well as on the NAV.

See, the NAV s largely based on the valuation undertaken by the valuer and they have

summarized the valuation sensitivities in their valuation report as well.

So, I would suggest if

you could refer it on the website.

So, that would give you a range of sensitivity outputs based on

the WACC rate, which they have done over there.

But do you see any significant impact....

Sorry to interrupt, Mr.

Bagadia, may we please request you to rejoin the queue, sir?

Next question is from the line of Sarvesh Gupta from Maximal Capital PMS.

Please go ahiead.

So, sir, one question was on your cost of debt.

So, this time, our incremental

cost of debt has been sub 7%.

And that has reduced our overall cost of debt.

But given all these

geopolitical headwinds and the yield going up across the world and in India, how are you looking

into your incremental and weighted average cost of debt in the coming year?

This is what I was trying to explain carlier as well.

Because all our assets are annuity based.

Therefore, in all of the 12 assets, we leave interest along with the annuity receipts, which is

linked to the bank rate.

If the interest rates are to go up, my revenue for all the 12 projects will increase substantially,

will increase, linked to the changes in the bank rate in future.

And my cost of debt is, because

my average is only, say, 41% right now.

Therefore, my cost of debt is less compared to the

revenue which I would be receiving in a financial year.

Therefore, in any financial year with movement in the interest rate, we are always going to

benefit than losing it out.

Right now, about INR 300,000 crores of debt, INR 1,000 crores are in

terms of debenture, approximately, of which, the substantial portion we will reset in another two

years from now, the debenture itself.

And the floating rate will continue to be a variable interest

Going forward, when we are doing acquisitions and when we are acquiring the new assets

through debt itself.

In that scenario, we would be optimizing the debt profile in such a manner

that we are balancing out fixed floating and we are optimizing our net inflow given our revenues

are linked to interest rates and our interest rate environment.

Anant Mundra

And the way I understand your acquisition strategy broadly s that in FY27, you would

want to reach 60%-65% debt to AUM and acquire asset primarily by debt and then for FY28

acquisitions, you would want to do fundraise to the extent of 30-40% of the incremental assets

that you will be taking up from a sponsor.

Is that a broadly right understanding, sir?

A slight correction over there.

What we are coming at s that post-June, we would be

touching 57.5%-60% debt level not 65%.

That's not optimum.

Our intention would be

somewhere close to 57.5%.

And thereafter, we would maintain that at the same level.

70% mark is permitted by SEBL, but we do not intend to go and have a very high leverage in the

And given the valuations where they are, have you also explored rights issue as one of

the ways to raise equity debt, equity capital in the company?

Definitely, we will consider that as well as a source of capital.

Once we reach this stage of equity

dilution or equity fundraise, for sure, we are going to consider rights issues this time.

Thank you and all the best.

Next question is from the line of Anant Mundra from My Temple Capital.

Thank you for the follow-up.

Sir, in terms of organization building, just wanted to

understand, are you trying to build a team that could evaluate different asset classes from the

one that we are currently in?

Like, say, BOT or maybe some kind of power transmission assets?

Because currently, I mean, we have a strong ROFO my pipeline, but beyond that, in order to

elongate the life of the InvIT, we will have to explore certain kind of assets as well.

See, right now, we have a team which is specialized more into the road sector.

intend to move out of the road sector and step in power sector right now, as of now, we want to

continue to focus on the road sector itself.

And even in toll versus annuity assets, in the near

term, our objective is to continue with the annuity assets.

We don't just want to onboard one toll

assets, one or two.

Ifwe come across a decent pool of assets, which are accretive in nature from value as well, then

we may look into it.

But primarily, we are targeting even the third-party assets more in the

annuity mode right now.

So, for next 12 months, our focus will be more on the annuity-based

road assets, because this s what our strength is.

This is what we have good hold on.

‘what we want to continue with in the near term.

So, does the promoter have any BOT assets?

As of now, sponsors don't have BOT assets.

Even NHAI had made changes in the bidding

process for the road assets last year.

What [ understand, they are evaluating BOT assets as well.

So they are in the bidding stage right now for new allocations from NHAL

Would those automatically, in case the sponsor wins some BOT assets, would they automatically

form part of the ROFO?

Moderator

Yes, any assets which are structural assets in nature, which is operational, once they develop and

it's stabilized, then we will benefit from ROFO on that.

And, sir, just one final question.

On the reserve side, are we maintaining both a

maintenance reserve and a DSRA reserve?

As of now, no maintenance kind of reserve we are keeping.

As of now, for the last quarter,

DSRA reserve we have to maintain, because that's anyway a debt requirement.

So that we have

In addition, for Q4 FY26, what we have maintained is only the regular reserve to

meet the operating expenses and the debt obligations which are over the next two, three months.

So, we have maintained reserves of these two types.

This is not a requirement of the authority or the banks to keep a maintenance reserve?

No, 5o our loans are not at the SPV level.

Our loans are at the trust level.

Therefore, there is no

specific requirement of bank loans that we need to maintain and reserve, DSRA.

are taking borrowing at the SPV level, then that requirement comes into play.

In our portfolio,

all the borrowings are at the trust level.

That's it from my end.

Ladies and gentlemen, we will take this as a last question for the day.

the conference over to the management for the closing comments.

Over to you, management.

Thank you all for joining and sharing your feedback and comments.

And I look forward to look

forward to connecting again in the next quarter.

Thank you very much.

Thank you, sir.

of HDFC Securities, that concludes this conference.

Thank you all for

joining us, and you may now disconnect your lines.