CapitaLand India Trust (CLINT) BUY Rating: Growth Pipeline Focus Amid 1Q25 Update & Revised Fair Value 1

OCBC Investment Research 25 April 2025
CapitaLand India Trust (CLINT) Update: Sharpening Focus on Growth Pipeline Amid Market Dynamics

Investment Thesis: Tapping into India’s Growth Story

CapitaLand India Trust (CLINT), Asia’s first listed property trust focused on India, presents a unique investment proposition. Primarily operating within the Information Technology (IT) sector, CLINT holds a portfolio of 11 IT park clusters across key Indian cities like Mumbai, Hyderabad, Bangalore, and Chennai. The trust has strategically expanded into logistics, industrials, and data centres (DC), building a robust pipeline of developmental projects.
CLINT distinguishes itself from more defensive Singapore-listed trusts and REITs through its proactive acquisition strategy, often utilizing forward purchase agreements. While this approach entails development risks, CLINT’s ability to secure strategically located assets positions it advantageously. Its forward-looking philosophy allows it to benefit from India’s rapidly expanding economy, driven by significant tailwinds such as e-commerce growth, increasing data localisation needs, and the proliferation of digital payments. Furthermore, the easing of regulations surrounding Special Economic Zones (SEZ) mitigates occupancy risks associated with its existing SEZ properties.
The current rating for CLINT stands at BUY as of 25 April 2025, with a last closing price of SGD 0.95 and a revised fair value estimate of SGD 1.23.

1Q25 Performance Highlights: Strong Operational Momentum

CLINT reported a solid start to the year with its 1Q25 financial results:

• Total Property Income: Increased by 12% year-on-year (YoY) to SGD 74.6 million (14% growth in local currency terms).
• Net Property Income (NPI): Grew by 12% YoY to SGD 55.1 million (14% growth in local currency terms).

This growth was driven by higher rental income from existing properties and contributions from assets acquired in 2024. These quarterly figures represent approximately 22.5% of the initial full-year forecasts.
Operational performance remained robust:

• Committed Occupancy: Stable at 92%, inclusive of options and rights of first refusal.
• Rental Reversion: Achieved a positive rental reversion of 9% over the past 12 months, primarily led by assets located in Bangalore and Chennai.

Divestment Delays and Gearing Update

As of 31 March 2025, CLINT’s gearing increased to 41.5%, up 3 percentage points from 38.5% at the end of December 2024. This rise was attributed to debt drawdown for working capital requirements and funding ongoing development projects.
Management anticipates that gearing will decrease to below 40% following the completion of the divestments of CyberPearl and CyberVale. Originally scheduled for completion by the end of February 2025, these divestments have been postponed to May 2025 due to prevailing market volatility.
The cost of debt remained stable at 6%, with a significant 84.5% of the debt portfolio secured on fixed rates. Management expects this stability to continue into the next quarter.

Strategic Acquisition: Strengthening Bangalore Office Footprint

In February 2025, CLINT entered into a forward purchase agreement to acquire an office project located at Nagawara, Outer Ring Road, Bangalore, known as MAIA. Key details of the agreement include:

• Funding Commitment: CLINT will provide SGD 156.4 million in funding over the next four years, commencing in the second half of 2025 (2H25).
• Acquisition Timeline & Cost: The acquisition is planned post-completion of the building in the second half of 2028 (2H28), with an estimated total cost of SGD 233.6 million.
• Funding Sources: The funding will be sourced from a mix of divestment proceeds, debt facilities, and internal resources.
• Pro Forma Impact: If the acquisition had been completed on 1 January 2025, CLINT’s FY24 distribution per unit (DPU) would have seen an accretive impact, increasing by 1.8% to 6.96 Singapore cents.

Revised Fair Value and Forecast Adjustments

Management noted that while direct impacts from US tariffs on tenants are minimal, the broader global economic uncertainty could potentially slow growth in the service industry and moderate leasing demand in the near term. However, India is still viewed as an attractive relocation destination over the medium term.
Reflecting a change in analyst coverage and current market conditions, several assumptions have been fine-tuned:

1. A steeper depreciation of the Indian Rupee (INR) against the Singapore Dollar (SGD) over the next 12 months is factored in, aligning with the house view.
2. The cost of equity assumption has been increased from 9.38% to 9.8% to account for near-term macroeconomic uncertainties.
3. The terminal growth rate assumption has been lowered by 25 basis points to 2.5%.

The forward purchase agreement for MAIA has also been incorporated into the financial model. Consequently, DPU forecasts for FY25E and FY26E have been adjusted downwards by 3.6% and 4.9%, respectively.
These adjustments lead to a revised Fair Value (FV) estimate of SGD 1.23, down from the previous SGD 1.27. Despite the reduction, a BUY rating is maintained.

ESG Profile and Initiatives

CLINT’s ESG rating was reaffirmed in December 2024. According to ESG Research, the trust demonstrates leadership among its peers, particularly in green building initiatives. This includes implementing green leases to encourage sustainable property usage. With 79.5% of its total portfolio area certified to green building standards in FY23 (significantly above the industry average of 47%), CLINT is well-positioned to capitalize on the growing demand for sustainable real estate. However, its focus on office buildings means energy consumption may be relatively intensive.
In terms of social factors, CLINT outperforms peers in staff management practices, including robust grievance mechanisms, addressing the key challenge of recruiting and retaining skilled personnel in the real estate sector. Furthermore, ESG Research highlights that CLINT’s board maintains a majority independence.

Potential Catalysts

• Progress on the partial divestment of its Data Centre assets.
• Stronger-than-anticipated demand for outsourcing services, benefiting tenant demand.
• Increased tenant absorption resulting from the denotification of SEZ spaces.

Investment Risks

• Forward purchase agreements failing to meet pre-agreed building specifications or the inability of sellers to repay provided loans.
• Potential delays in the development and planned divestment of Data Centre projects.
• Unexpected appreciation of the Singapore Dollar (SGD) against the Indian Rupee (INR), impacting translated earnings.

CapitaLand India Trust Overview (as of 31 December 2024)

Listed on the Singapore Stock Exchange Mainboard since August 2007, CapitaLand India Trust (CLINT) was the first Indian property trust established in Asia. While structured as a business trust, it voluntarily adheres to S-REIT restrictions to ensure distribution stability. CLINT offers investors exposure to India’s high-growth market by investing in income-generating commercial real estate.
As of 31 December 2024, its portfolio comprised 11 IT parks, four data centre developments, and three logistics and industrial facilities. These assets span a total completed floor area of 19.6 million square feet across Bangalore, Chennai, Hyderabad, Mumbai, and Pune, with a total valuation of SGD 3.4 billion. CLINT is managed by CapitaLand India Trust Management Pte. Ltd., a wholly owned subsidiary of CapitaLand Investment.
FY24 Base Rents Breakdown:

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

Historical Performance Trends: Net Property Income (NPI) has shown consistent growth from SGD 128m in FY2018 to SGD 206m in FY2024. Distribution Per Unit (DPU) has fluctuated, recording 6.10 S cents in FY2018, peaking at 8.83 S cents in FY2020, and standing at 6.84 S cents in FY2024.

Financial Snapshot

Financial Summary (SGD m)

Key Ratios (%)

Source: Refinitiv, Internal estimates
Security Information

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

Income Statement Summary (SGD m)

Source: Refinitiv
Profitability and Credit Ratios (FY2024)

• Return on Common Equity: 25.81%
• Return on Assets: 11.16%
• Net Income Margin: 157.90%
• Total Debt/EBIT: 10.07x
• Net Debt/EBIT: 9.30x
• EBIT to Interest Expense: 1.94x
• Net Debt/Equity: 0.94x

Source: Refinitiv

Peer Valuation Comparison

Source: Refinitiv
Disclaimer: This article is based on the OCBC Investment Research report dated 25 April 2025. It is intended for information purposes only and should not be construed as investment advice. Financial markets involve risks, and investors should conduct their own due diligence or consult a financial advisor before making investment decisions. All information is sourced from the provided report and may be subject to change.