OCBC Investment Research

25 April 2025

CapitaLand India Trust: Eyeing Growth with Strategic Acquisitions

Investment Overview

CapitaLand India Trust (CLINT), a pioneering property trust in Asia focused on the Indian market, presents a compelling investment case. With a primary focus on Information Technology (IT) parks across major Indian cities and a growing presence in logistics, industrials, and data centers, CLINT is strategically positioned to benefit from India’s burgeoning economy. The trust’s proactive acquisition strategy, particularly through forward purchases, sets it apart from its peers, offering investors exposure to a dynamic and expanding market.

• Rating: BUY (as of 25 April 2025)
• Last Close: SGD 0.95
• Fair Value: SGD 1.23

1Q25 Performance Highlights

CLINT demonstrated robust financial performance in 1Q25, marked by significant year-on-year growth:

• Total property income and net property income (NPI) surged by 12% year-on-year (YoY), driven by strong operating results.
• The divestment of CyberVale and CyberPearl is now expected to be completed by May 2025.
• A new forward purchase agreement is set to bolster CLINT’s office footprint in Bangalore.

Investment Thesis: Riding India’s Growth Wave

CLINT’s strategic focus on India’s rapidly expanding economy, fueled by e-commerce, data localization, and digital payments, underpins its investment appeal. The relaxation of the Special Economic Zones (SEZ) Act further mitigates occupancy risk for its existing SEZ properties.

Financial Performance and Key Metrics

CLINT’s financial health is reflected in its strong income and occupancy rates:

• Total property income and NPI increased by 12% YoY (14% in local currency) to SGD74.6m and SGD55.1m, respectively.
• Committed occupancy remained stable at 92%, inclusive of options and rights of first refusal.
• Rental reversion was a healthy +9% over the past 12 months, particularly in Bangalore and Chennai.

Security Information

• Ticker (Refinitiv / Bloomberg): CAPC.SI / CLINT SP
• Market Cap: SGD 1.3 billion
• Daily Turnover: SGD 2.8 million
• Free Float: 99%
• Shares Outstanding: 1,344 million
• Top Shareholder: Temasek Holdings Pte. Ltd. (25.4%)

Update on Divestment Plans and Gearing

The trust’s gearing ratio saw a temporary increase due to debt drawdown for working capital and development projects:

• Gearing rose to 41.5% as of 31 Mar 2025, up from 38.5% at the end of 2024.
• Management anticipates a drop below 40% following the completion of CyberPearl and CyberVale divestments, expected by May 2025.
• The cost of debt remains stable at 6%, with 84.5% on fixed rates.

Strategic Forward Purchase Agreement in Bangalore

CLINT’s proactive approach to expanding its portfolio is evident in its new forward purchase agreement:

• In Feb 2025, CLINT announced an agreement to acquire an office project (MAIA) in Nagawara, Outer Ring Road, Bangalore.
• CLINT will provide SGD156.4m in funding over four years, starting in 2H25.
• The acquisition, slated for completion in 2H28, is estimated to cost SGD233.6m.
• Pro forma analysis indicates a potential 1.8% increase in FY24 DPU to 6.96 Singapore cents, assuming the acquisition was completed on 1 Jan 2025.

Revised Fair Value Estimate

A recalibration of assumptions has led to a revised fair value estimate:

• The FV estimate has been reduced to SGD1.23 from SGD1.27, while maintaining a BUY rating.
• This revision factors in a steeper depreciation of INR vs SGD, a higher cost of equity (9.8%), and a lower terminal growth rate (2.5%).
• FY25 and FY26 DPU forecasts have been lowered by 3.6% and 4.9%, respectively.

ESG Initiatives

CLINT’s commitment to Environmental, Social, and Governance (ESG) principles is noteworthy:

• CLINT’s ESG rating was maintained in Dec 2024, leading peers in green building initiatives and sustainable property use.
• A significant 79.5% of its portfolio area was certified to green building standards in FY23, surpassing the industry average of 47%.
• The company also excels in staff management practices and boasts a majority-independent board.

Potential Catalysts and Investment Risks

Several factors could influence CLINT’s future performance:

• Potential Catalysts: Developments on DC partial divestment, stronger-than-expected outsourcing demand, and increasing tenant pick up through denotification of SEZ space.
• Investment Risks: Forward purchases failing to meet specifications, delays in DC development and divestment plans, and unexpected appreciation of SGD over INR.

Valuation Analysis

Comparative valuation metrics provide additional context:

Company Overview

CapitaLand India Trust, listed on the Singapore Stock Exchange since Aug 2007, is structured as a business trust but adheres to S-REIT restrictions for distribution stability. With a portfolio comprising 11 IT parks, four data centre developments, and three logistics and industrial facilities across key Indian cities, CLINT offers investors exposure to India’s high-growth commercial real estate sector. As of 31 Dec 2024, its assets totaled SGD3.4b across 19.6msqf.

FY24 Base Rents Breakdown

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

Historical Financial Performance

CLINT has demonstrated consistent growth in 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

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

Income Statement (In Millions of SGD)

Profitability Ratios

Credit Ratios