OCBC Investment Research

25 April 2025

CapitaLand India Trust: Eyeing the Prize in India’s Booming Economy

Investment Thesis: CLINT – A Strategic Play on India’s Growth

CapitaLand India Trust (CLINT), a pioneering property trust in Asia focused on India, presents a compelling investment case. Primarily concentrated in the Information Technology (IT) sector with 11 IT park clusters across major Indian cities like Mumbai, Hyderabad, Bangalore, and Chennai, CLINT has strategically diversified into logistics, industrials, and data centers (DC). CLINT distinguishes itself with an aggressive acquisition strategy leveraging forward purchases. While development risks exist, CLINT’s ability to secure strategically located assets and its forward-thinking approach position it as a key beneficiary of India’s rapidly expanding economy, bolstered by e-commerce growth, increasing data localization, and the surge in digital payments. The relaxation of the Special Economic Zones (SEZ) Act further mitigates occupancy risk for existing SEZ properties. [[1]]

Strong 1Q25 Performance: A Snapshot

• Total property income and net property income (NPI) increased by 12% year-on-year (YoY) in 1Q25, driven by robust operating performance. [[1]]
• The divestment of CyberVale and CyberPearl is now expected in May 2025. [[1]]
• A new forward purchase agreement will strengthen CLINT’s office footprint in Bangalore. [[1]]
• The fair value (FV) estimate has been revised to SGD1.23. [[1]]

Investment Summary: Key Financial Highlights

• CLINT’s total property income and NPI rose by 12% YoY (14% in local currency) to SGD74.6m and SGD55.1m, respectively, fueled by higher rental income from existing properties and contributions from 2024 acquisitions. This represents 22.5% of initial full-year forecasts. [[1]]
• Operating performance remains strong, with committed occupancy stable at 92%, including options and rights of first refusal. [[1]]
• The portfolio experienced +9% rental reversion over the past 12 months, particularly in Bangalore and Chennai. [[2]]

Update on Divestment Plans and Gearing

• Gearing increased by 3 percentage points (ppt) from 38.5% as of December 31, 2024, to 41.5% as of March 31, 2025, due to debt drawdown for working capital and development projects. Management anticipates a decrease below 40% following the completion of the CyberPearl and CyberVale divestments, now expected by May 2025 due to market volatility. [[2]]
• The cost of debt remains stable at 6%, with 84.5% of debt at fixed rates, projected to remain consistent in the near term. [[2]]

New Forward Purchase Agreement: Expanding Bangalore Footprint

• In February 2025, CLINT announced a forward purchase agreement to acquire an office project (MAIA) in Nagawara, Outer Ring Road, Bangalore. [[2]]
• CLINT will provide SGD156.4m in funding over four years, starting in 2H25. The acquisition, expected after completion in 2H28, is estimated at SGD233.6m, funded through divestment proceeds, debt, and internal resources. [[2]]
• Pro forma analysis indicates that if the acquisition had been completed on January 1, 2025, FY24 distribution per unit (DPU) would have increased by 1.8% to 6.96 Singapore cents. [[2]]

Revised Fair Value Estimate: Adjusting for Market Dynamics

• The fair value estimate has been reduced to SGD1.23. While US tariffs have minimal direct impact, global economic uncertainty may slow service industry growth and leasing demand. India remains an attractive relocation destination in the medium term. [[2]]
• Revised assumptions include: a steeper depreciation of INR vs SGD, an increased cost of equity input from 9.38% to 9.8% to account for near-term macroeconomic uncertainty, and a reduced terminal growth rate assumption by 25bps to 2.5%. [[2]]
• The forward purchase agreement for MAIA is factored in. FY25 and FY26 DPU forecasts are lowered by 3.6% and 4.9%, respectively. Despite these adjustments, a BUY rating is maintained. [[2]]

ESG Updates: Leading in Sustainability

• CLINT’s ESG rating was maintained in December 2024. The trust leads peers in green building initiatives, including green leases to promote sustainable property use, and is positioned to benefit from growing demand for green buildings. [[2]]
• 79.5% of its total portfolio area was certified to green building standards in FY23, significantly above the industry average of 47%. [[3]]
• CLINT outperforms peers in staff management practices, including grievance mechanisms, and the board is majority independent. [[3]]

Potential Catalysts for Growth

• Developments on DC partial divestment [[3]]
• Stronger-than-expected outsourcing demand [[3]]
• Increasing tenant pick up through denotification of SEZ space [[3]]

Key Investment Risks to Consider

• Forward purchases failing to meet pre-agreed building specifications and inability of sellers to repay loans [[3]]
• Delays in DC development and divestment plans [[3]]
• Unexpected appreciation of SGD over INR [[3]]

Valuation Analysis: Comparative Metrics

Here’s a look at how CapitaLand India Trust stacks up against its peers:

Source: Refinitiv

Source: Bloomberg

Company Overview: CLINT’s Portfolio and Strategy

CapitaLand India Trust, listed on the Singapore Stock Exchange since August 2007, is structured as a business trust but adheres to Singapore REIT restrictions to ensure distribution stability. Focused on India, CLINT offers investors exposure to the rapidly growing Indian market through income-producing commercial real estate. As of December 31, 2024, CLINT’s portfolio includes 11 IT parks, four data center developments, and three logistics and industrial facilities, totaling 19.6 million square feet across Bangalore, Chennai, Hyderabad, Mumbai, and Pune, valued at SGD3.4 billion. CapitaLand India Trust Management Pte. Ltd., a wholly-owned subsidiary of CapitaLand Investment, manages CLINT. [[4]]

FY24 Base Rents Breakdown: Diversification by City and Sector

• By City (India): Hyderabad (27%), Bangalore (27%), Chennai (18%), Pune (20%), Mumbai (8%) [[4]]
• By Tenant Sector: Technology & Software Development (61%), Electronics, Semiconductor & Engineering (11%), Automobile (6%), Banking & Financial Services (7%), Design, Gaming and Media (3%), Others (8%) [[4]]

Historical Financial Performance: Net Property Income and Distribution Per Unit

• Net Property Income (SGD m): FY2018 (128), FY2019 (136), FY2020 (148), FY2021 (156), FY2022 (167), FY2023 (180), FY2024 (206) [[4]]
• Distribution per unit (S cents): FY2018 (6.10), FY2019 (7.33), FY2020 (8.83), FY2021 (7.80), FY2022 (8.19), FY2023 (6.45), FY2024 (6.84) [[4]]

Detailed Company Financials

Key figures from the income statement, profitability ratios, and credit ratios are as follows (in Millions of SGD except Per Share):

Profitability Ratios

Credit Ratios

Source: Refinitiv [[5]]

Analyst Certification

The analyst(s) involved in preparing this report affirms that the views expressed accurately reflect their personal opinions regarding the securities of the listed entity. They have maintained independence and objectivity in forming these opinions. Neither the analysts nor their connected persons hold financial interests in the listed entity, and compensation is not linked to specific recommendations within the report. The analyst(s) do not serve on the board or in trustee positions of the listed entity, and no compensation or benefits have been provided by the listed entity or third parties in connection with this report. [[6]]

Disclaimer

This report is for informational purposes only and should not be construed as an offer or solicitation for the purchase or sale of securities. Forecasts are not indicative of future performance. While the information is believed to be reliable, no guarantee is made regarding its accuracy or completeness. The securities mentioned may not be suitable for all investors. Opinions are subject to change without notice. This report does not consider the specific investment objectives, financial situation, or particular needs of any individual or class of persons. OCBC Bank, Bank of Singapore Limited, OIR, OCBC Securities Private Limited, and their respective related companies, directors, and/or employees may have interests in the investment products or issuers mentioned herein, including effecting transactions and providing related services. Conflicts of interest may exist. Forward-looking statements involve risks, and actual results may differ materially. Past performance is not indicative of future results. This report may contain privileged or confidential information and should not be copied or distributed without authorization. [[6]]

Ratings and Recommendations

• OIR’s technical comments and recommendations are short-term and trading oriented. [[7]]
• OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. [[7]]
• As a guide, OIR’s BUY rating indicates total expected returns (excluding dividends) in excess of 10% based on the current price; a HOLD rating indicates total expected returns (excluding dividends) within +10% and -5%; a SELL rating indicates total expected returns (excluding dividends) less than -5%. For REITs and Business Trusts, total expected returns including dividends apply. [[7]]
• For companies with market capitalisation of S\$150m and below, OIR’s BUY rating indicates total expected returns (excluding dividends) in excess of 30%; a HOLD rating indicates total expected returns (excluding dividends) within a +/-30% range; a SELL rating indicates total expected returns (excluding dividends) less than -30%. For REITs and Business Trusts, total expected returns including dividends apply. [[7]]