The upcoming Capital Infra Trust Infrastructure Investment Trust (InvIT) IPO has generated significant interest among investors. Priced at ₹99-₹100 per share, the IPO aims to raise ₹1,578 crore through a combination of fresh issue and an offer for sale. Here’s an in-depth analysis of the IPO, its objectives, industry outlook, and financials to help investors make an informed decision.
Key Details of the Capital Infra Trust InvIT IPO
| Particulars | Details |
|---|---|
| IPO Dates | January 7, 2025 – January 9, 2025 |
| Price Band | ₹99 – ₹100 |
| Lot Size | 150 Shares |
| Minimum Investment | ₹15,000 |
| Maximum Investment | ₹1,95,000 |
| Issue Size | ₹1,578 crore |
| Fresh Issue | ₹1,077 crore |
| Offer for Sale | ₹501 crore |
| Listing Date | January 14, 2025 |
| Lead Managers | SBI Capital Markets, HDFC Bank |
| Registrar | KFin Technologies |
Industry Overview
The Indian infrastructure sector is poised for substantial growth, backed by government initiatives and foreign direct investment (FDI). Between FY20 and FY25, the National Infrastructure Pipeline (NIP) has earmarked an investment of ₹111 lakh crore, covering 9,000 projects across 35 sub-sectors.
Key Growth Drivers:
- FDI Inflows: FDI in construction development reached $26.61 billion, while infrastructure activities attracted $33.91 billion between FY01-FY24.
- Hybrid Annuity Model (HAM): HAM projects ensure predictable long-term cash flows, reducing risks for investors.
- Diversified Investments: The Indian government’s push for road, rail, and port projects offers broad opportunities for infrastructure development.
Objectives of the IPO
The Capital Infra Trust plans to utilize the proceeds for the following:
- Repayment of Borrowings: A significant portion will be allocated to repay or prepay external borrowings, including accrued interest and penalties.
- Sponsor Loans: Funds will also be used to clear unsecured loans availed by project SPVs from the sponsor.
These objectives aim to strengthen the financial position of the trust, enabling it to focus on long-term growth and stable returns for investors.
Strengths of Capital Infra Trust InvIT
- Diverse Portfolio: The trust’s portfolio includes nine operational road assets spanning 682.425 km across seven states.
- Stable Revenue Streams: Regular annuities from the National Highways Authority of India (NHAI) ensure predictable income. In 2024, the trust received annuities worth ₹5,544.59 million.
- Geographic Diversification: Assets spread across multiple states reduce region-specific risks.
- High Credit Rating: The trust’s provisional CRISIL AAA/Stable rating underscores its financial stability.
- Residual Concession Periods: With an average residual concession period of 11.7 years, the trust is well-positioned for long-term revenue generation.
- Strong Sponsor: Gawar Construction Limited has a proven track record in road and highway projects across 19 states.
Risks and Challenges
- Limited Operating History: As a relatively new entity, the trust’s performance history is limited, making future returns uncertain.
- Regulatory Approvals: Formation transactions are subject to NHAI approvals and lender conditions.
- Revenue Dependency: The trust heavily relies on annuity payments from NHAI, which are subject to timely disbursement.
- O&M Costs: Unpredictable increases in operation and maintenance costs could impact profitability.
- Short Residual Periods: The limited concession period restricts long-term growth potential beyond 11.7 years on average.
- Project Termination Risks: Early termination of projects could lead to reduced termination payments.
Financial Performance
| Particulars | H1 FY25 | FY24 | FY23 | FY22 |
|---|---|---|---|---|
| Revenue (₹ crore) | 792.27 | 1,543.51 | 2,518.92 | 1,981.42 |
| PAT (₹ crore) | 115.43 | 125.77 | 497.19 | 125.56 |
| Assets (₹ crore) | 4,905.26 | 4,724.07 | 4,283.33 | 2,502.80 |
Key Observations:
- The trust’s revenue and profit margins show volatility, attributed to annuity-based payments and project cycles.
- Asset growth indicates continued investment in high-value infrastructure projects.
Capital Infra Trust InvIT Lot Size and Investment Breakdown
| Category | Lots | Shares | Investment (₹) |
|---|---|---|---|
| Retail (Min) | 1 | 150 | 15,000 |
| Retail (Max) | 13 | 1,950 | 1,95,000 |
| S-HNI (Min) | 14 | 2,100 | 2,10,000 |
| B-HNI (Min) | 67 | 10,050 | 10,05,000 |
How to Apply for the IPO
- Login to Your Brokerage Account: Access your Demat account through platforms like Angel One or Zerodha.
- Locate the IPO Section: Navigate to the IPO section and find Capital Infra Trust InvIT.
- Select Lot Size: Choose the desired number of lots.
- Submit UPI Details: Enter your UPI ID for payment approval.
- Approve the Mandate: Confirm the mandate request on your UPI app.
Conclusion: Should You Invest?
Capital Infra Trust InvIT offers a unique opportunity to invest in stable, annuity-based infrastructure projects. With a strong sponsor, high credit rating, and diversified portfolio, it caters to risk-averse investors seeking steady returns. However, challenges such as regulatory dependencies and limited operational history require careful consideration.
Investor Recommendation:
This IPO is suitable for investors with a long-term horizon, looking for predictable income through dividends and capital appreciation. While the growth prospects are moderate, the inherent stability of the infrastructure sector provides a buffer against market volatility.
Disclaimer
This analysis is for informational purposes only and should not be considered financial advice. Investors are advised to consult their financial advisor and refer to the RHP before making investment decisions.