CapitaLand India Trust: Strong underlying performance detracted by FX

Strong underlying growth masked by weaker INR against SGD 

CapitaLand India Trust reported total property income of INR4,878 million in 1Q FY26, increased by 3% year-on-year. Net property income (NPI) grew 8% year-on-year in 1Q FY26, to INR3,775 million. The stronger NPI growth relative to total property income reflects improved operating leverage — cost efficiencies are flowing through to the bottom line. 

The INR growth was driven by sustained performance from existing properties, plus contributions from new developments — specifically MTB 6 and the partial handover of CapitaLand DC Navi Mumbai Tower 1 to the tenant since July 2025. As Tower 1 ramps up and Tower 2 comes online in 4Q26, NPI contributions from the data centre segment will grow substantially.

Management reiterated its focus on proactive cost management in light of recent geopolitical tensions. The impact is partly mitigated by the portfolio’s energy mix, with 57% sourced from renewable energy, while utility costs are largely passed through to tenants and are not expected to materially affect net property income. Although the recent spike in oil prices and potential inflationary pressures remain contained for now, CapitaLand India Trust will continue to monitor cost pressures, including any impact on its development pipeline.

In SGD currency terms, CapitaLand India Trust reported total property income of S$69.0 million in 1Q FY26, down 8% year-on-year in SGD terms (1Q FY25: S$75.0 million). NPI was S$53.4 million, down 3% year-on-year in SGD terms (1Q FY25: S$55.1 million). The SGD declines were wholly attributable to INR depreciation against SGD — the 1Q26 average exchange rate of S$1: INR 70.7 was weaker versus 1Q FY25.

Portfolio shows firm occupancy and robust rental revision

IT park committed occupancy was 91% as at 31 March 2026, unchanged from 31 December 2025. CapitaLand India Trust continues to outperform relevant submarket vacancy rates across all cities. 

Bangalore micro-market occupancy is 83% versus CapitaLand India Trust's 88–100% across individual assets. 

Hyderabad submarket is 87% versus CapitaLand India Trust's International Tech Park Hyderabad (ITPH) at 97% and aVance Hyderabad achieving 88–90%.

The portfolio achieved a trailing 12-month rental reversion of +17%, led by assets in Hyderabad and Bangalore.  The strong reversions reflect tight vacancy, Global Capability Centres (GCC)  demand, and quality asset positioning.

In total, CapitaLand India Trust secured 73 eligible transactions covering 1.88 million sq ft of super built-up area (SBA). To note, leasing continues to be competitive in Pune, where rental reversion was flat.   This is mitigated by Capitaland India Trust’s diversified exposure across region, in terms of base rent.

With proactive asset management, weighted average lease expiry was 3.3 years as of 31 March 2026, compared with 3.4 years at of December 2025.

Approximately 50% of remaining 2026 lease expiries are either already renewed or highly likely to be renewed, providing good near-term income visibility. The lease expiry profile is well-spread, with only 9.7% of base rent expiring in the remainder of 2026, followed by 17.3% in 2027 and 22.7% in 2028.

Updates on data centre portfolio 

The three facilities totalling 200 MW are completing through 2026, all structured as long-term colocation leases to blue-chip hyperscalers.

Navi Mumbai Tower 1, the first completed data centre, has started handover to the tenant since July 2025.  CapitaLand India Trust will record full contribution from Navi Mumbai Tower 1 in FY2026. Tower 2 Navi Mumbai will come online 4Q26.  Both Tower 1 and Tower 2 are fully leased to a global hyperscaler, providing income visibility for FY2027. 

International Tech Park Hyderabad and Chennai Data Centres are contributing from mid-2026.

In February 2026, CapitaLand India Trust divested 20.2% stake in the development at 13.7% premium to independent valuation.  The transaction raised about S$99.7 million. This active capital recycling is part of CapitaLand India Trust’s strategy and provides funding for other growth projects.

The premium valuation reflects the competitiveness of CapitaLand India Trust’s assets.  For instance, Tower 2 is one of the largest single-tower implementations of liquid cooling in the region and has one of the best design power usage effectiveness achieved for a single data -centre tower, according to the management.

Adequate financial flexibility to fund growth pipeline

The divestment of a 20.2% stake in CapitaLand India Trust's three data centre developments (completed 27 February 2026) was highly value-accretive, realising proceeds at a 2.7x multiple on invested capital and a 13.7% premium to independent valuation. 

The transaction reduced gearing from 39.6% at end-2025 to 35.7% as at 31 March 2026, leaving CapitaLand India Trust with S$1.28bn of debt headroom to the 50% regulatory limit.

Effective borrowings stood at S$1,610 million as at 31 March 2026, with an average term to maturity of 2.7 years. Effective borrowings declined quarter-on-quarter due to this repayment, resulting in actual interest savings.

The INR:SGD borrowings split was 54:46, and management is targeting 40-50% onshore INR debt over the next few years to increase the natural hedge against INR depreciation. Currently, 54% of debt is INR-denominated.    

Average cost of debt rose slightly to 5.7% from 5.6% at end-2025, due to a higher INR debt ratio as lower-cost SGD loans were repaid and replaced with onshore INR borrowings. 

As at 31 March 2026, INR onshore borrowings accounts for 23% of total debt.  CapitaLand India Trust plans to increase the portion of onshore borrowing to 40% - 50%, in order to take advantage of the lower borrowing cost and to leverage on the tax efficiency. 

Interest coverage ratio (ICR) improved to 2.8x (end-2025: 2.7x), and 78.5% of borrowings are on fixed rate (up from 72.6%), providing strong protection against interest rate increases.

The debt maturity profile shows refinancing requirement of S$210.9 million in FY2026 and S$305.3 million in FY2027.   We think the quantum is manageable, particularly given the lower gearing ratio as at 31 March 2026. 

As part of the capital management strategy to keep gearing ratio at a prudent level, CapitaLand India Trust launched a private placement on 24 February 2026. The private placement of 124.2 million new units at S$1.208 per unit, raised  approximately S$150 million.  The proceeds will be used to fund the forward purchase pipeline, including assets Ebisu and MAIA. 

Maintain BUY and target price at S$1.36

Currently, CapitaLand India Trust is trading at S$1.04, implying FY2026E distribution yield of 8.1%. This is relative more attractive than the comparables’ average FY2026E distribution yield of 6.3%. 

In terms of P/B ratio, CapitaLand India Trust is trading at a discount to its book value, at P/B 0.88x. This is also cheaper than the comparables’ average P/B of 0.94x.      

We maintain our BUY rating with a target price at S$1.36. With a quality growth pipeline and data centre projects on track for completion in 2026-2027, we expect upside potential to our estimates on their FY2027E DPU growth.  Specifically, ITPH and Chennai Data Centre are contributing from mid-2026. Tower 2 Navi Mumbai will come online 4Q26.  

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