OCBC Investment Research Private Limited

25 April 2025

CapitaLand India Trust: Eyeing Growth with Strategic Acquisitions

Investment Thesis: CLINT’s Position in India’s Thriving Economy

CapitaLand India Trust (CLINT), a pioneering property trust in Asia focused on India, is strategically positioned to benefit from the country’s rapid economic expansion. With a primary focus on the Information Technology (IT) sector, CLINT boasts 11 IT park clusters across major Indian cities such as Mumbai, Hyderabad, Bangalore, and Chennai. The trust has also diversified into logistics and industrials, maintaining a robust pipeline of developmental projects, including data centers (DC). CLINT distinguishes itself through an aggressive acquisition strategy, utilizing forward purchases to secure strategically located assets. This forward-looking approach positions CLINT as a key beneficiary of India’s growth, driven by e-commerce expansion, increasing data localization, and the rise of digital payments. Furthermore, the relaxation of the Special Economic Zones (SEZ) Act reduces occupancy risk for CLINT’s existing SEZ properties. [[1]]

1Q25 Performance: Strong Growth in Property Income

• CLINT’s total property income and net property income (NPI) increased by 12% year-on-year (YoY) in 1Q25, driven by strong operating performance. [[1]]
• Total property income reached SGD74.6m, and NPI amounted to SGD55.1m, representing 22.5% of initial full-year forecasts. [[1]]
• Operating performance remained robust, with committed occupancy stable at 92%, including options and rights of first refusal. [[1]]
• Rental reversion was a positive +9% over the past 12 months, particularly in Bangalore and Chennai. [[2]]

Update on Divestment Plans and New Acquisitions

• The divestment of CyberVale and CyberPearl has been delayed until May 2025 due to ongoing market volatility. [[1]]
• Gearing rose by 3 percentage points (ppt) to 41.5% as of 31 March 2025, due to debt drawdown for working capital and development projects, but is expected to fall below 40% post-divestment. [[2]]
• Cost of debt remained stable at 6%, with 84.5% of debt on fixed rates, expected to remain stable in the near term. [[2]]
• In February 2025, CLINT announced a forward purchase agreement to acquire an office project (MAIA) in Nagawara, Bangalore, with an estimated cost of SGD233.6m, funded through a mix of divestment proceeds, debt, and internal resources. [[2]]
• This acquisition is projected to increase FY24 distribution per unit (DPU) by 1.8% to 6.96 Singapore cents on a pro forma basis. [[2]]

Revised Fair Value Estimate: SGD1.23

• The fair value (FV) estimate has been reduced to SGD1.23, reflecting adjustments in assumptions, including a steeper depreciation of INR vs SGD, an increase in the cost of equity input from 9.38% to 9.8%, and a reduction in the terminal growth rate assumption by 25bps to 2.5%. [[2]]
• FY25 and FY26 DPU forecasts have been lowered by 3.6% and 4.9%, respectively, to account for these factors and the forward purchase agreement for MAIA. [[2]]
• Despite these adjustments, a BUY rating is maintained on the counter. [[2]]

ESG Updates: Leading in Green Building Initiatives

• CLINT maintained its ESG rating in December 2024, leading peers in green building initiatives, including green leases to promote sustainable property use. [[2]]
• 79.5% of CLINT’s 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, with a majority-independent board. [[3]]

Potential Catalysts and Investment Risks

Potential Catalysts: [[3]]

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

Investment Risks: [[3]]

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

Valuation Analysis

Comparison with peers:

Company Overview

CapitaLand India Trust, listed on the Singapore Stock Exchange since August 2007, is structured as a business trust that voluntarily adheres to S-REIT restrictions to ensure distribution stability. CLINT offers investors access to India’s high-growth markets through investments in income-producing commercial real estate. As of 31 December 2024, CLINT’s portfolio includes 11 IT parks, four data center developments, and three logistics and industrial facilities across key Indian cities, totaling 19.6msqf of completed floor area valued at SGD3.4b. CapitaLand India Trust Management Pte. Ltd., a wholly-owned subsidiary of CapitaLand Investment, manages CLINT. [[4]]

FY24 Base Rents Breakdown

By City (India): [[4]]

• Hyderabad: 27%
• Bangalore: 27%
• Chennai: 18%
• Pune: 20%
• Mumbai: 8%

By Tenant Sector: [[4]]

• Technology & Software Development: 61%
• Others: 8%
• Electronics, Semiconductor & Engineering: 11%
• Automobile: 6%
• Banking & Financial Services: 7%
• Design, Gaming and Media: 3%

Historical Financial Performance

Net Property Income (SGD m): [[4]]

• FY2018: 128
• FY2019: 136
• FY2020: 148
• FY2021: 156
• FY2022: 167
• FY2023: 180
• FY2024: 206

Distribution per unit (S cents): [[4]]

• FY2018: 6.10
• FY2019: 7.33
• FY2020: 8.83
• FY2021: 7.80
• FY2022: 8.19
• FY2023: 6.45
• FY2024: 6.84

Company Financials

Income Statement [[5]]

Profitability Ratios [[5]]

Credit Ratios [[5]]