Business Description

CapitaLand India Trust (CLINT) primarily operates in India’s commercial real estate sector, focusing on the ownership, acquisition, and management of business parks, IT parks, industrial facilities, and logistics parks. Its geographic footprint spans major Indian cities, including Bangalore, Hyderabad, Chennai, Pune, and Mumbai. The trust has a diversified portfolio, with a total floor area of 21.9 million sq. ft. across its properties as of 2024.

CLINT caters largely to the IT/ITES sector, contributing significantly to its rental income. The company’s tenants include multinational corporations (94%) and Indian companies (6%). This customer base provides a competitive advantage due to long-term leases and robust demand from technology firms.

Industry Position

CLINT operates in a competitive commercial real estate market dominated by players such as Embassy REIT and Brookfield India REIT. Its portfolio quality, geographical diversity, and focus on IT tenants place it in a strong position to benefit from India’s growing IT sector. CLINT has achieved significant occupancy rates (92% portfolio-wide) and a weighted average lease term of 6.5 years, ensuring revenue predictability.

Revenue Streams and Customer Base

The company derives its revenue from base rentals, amenities, and fit-out income, mainly from IT parks. IT tenants represent 48% of the revenue base, with IT-enabled services (ITES) contributing 36%. Key tenants include Amazon, Applied Materials, and Tata Consultancy Services. The trust has diversified tenant industries, with significant contributions from R&D, logistics, and engineering sectors.

Financial Statement Analysis

Income Statement

Net profit after tax surged by 216% from INR 9.67 billion in 2023 to INR 28.64 billion in 2024. This growth is primarily driven by fair value gains on investment properties (INR 20.75 billion) and increased property income (INR 17.38 billion, up from INR 14.38 billion in 2023). The trust distributed INR 5.71 billion as dividends, translating to INR 4.26 DPU in 2024, a modest increase from INR 3.96 in 2023.

Balance Sheet

Total assets increased significantly to INR 232.47 billion in 2024 from INR 181.71 billion in 2023, driven by property acquisitions and valuation gains. Gearing rose to 38%, indicating higher leverage but within manageable limits. Net asset value (NAV) per unit increased to SGD 1.38 from SGD 1.16 in 2023.

Cash Flow Statement

While the cash flow statement details are not explicitly mentioned, the increased borrowings (SGD 1.74 billion) and property acquisitions indicate significant capital investments in 2024.

Key Strengths

• Strong Net Profit Growth: 216% increase in net profit demonstrates effective asset management and valuation gains.
• Diverse Portfolio: Presence in key Indian cities with a total floor area of 21.9 million sq. ft. provides geographic risk diversification.
• Resilient Occupancy Rates: High occupancy (92%) and long-term leases ensure stable cash flows.
• Strong Tenant Profile: 94% multinational corporations, including global leaders like Amazon and Tata Consultancy Services.

Key Risks

• High Leverage: Gearing at 38% indicates higher financial risk, especially in a rising interest rate environment.
• Tenant Concentration: Heavy reliance on IT/ITES tenants could be a risk if the sector faces a slowdown.
• Currency Risk: Exposure to SGD-INR exchange rate fluctuations could impact NAV and distributions.

Special Activities

In 2024, CLINT acquired aVance II, Pune, and Building Q2 in Mumbai, adding 2.2 million sq. ft. to its portfolio. These strategic acquisitions underline the trust’s focus on expanding its footprint in high-demand locations, which is expected to drive future income growth.

Recommendations

For Current Investors:

Hold the stock. The strong net profit growth, high occupancy rates, and increasing NAV per unit make it a valuable long-term investment. However, monitor gearing levels and tenant concentration risks.

For Potential Investors:

Buy the stock. The trust’s robust financial performance, strategic acquisitions, and exposure to India’s growing IT sector present a compelling investment opportunity. Ensure risk tolerance for financial leverage and currency exposure.

Disclaimer: This recommendation is based solely on the information provided in the 2024 financial report. Investors should conduct their own due diligence or consult a financial advisor before making investment decisions.