Capital Infra Trust IPO Opens for Subscription: Analysts Assess Long-Term Growth Potential

January 7, 2025 – The highly anticipated Initial Public Offering (IPO) of Capital Infra Trust InvIT has officially opened for public subscription today, offering investors a chance to participate in the country’s growing infrastructure sector. The IPO seeks to raise Rs 1,578 crore, with an anchor allocation of 45%, signaling strong institutional confidence.

The price band for the Capital Infra Trust IPO has been set between Rs 99-100 per unit, and the lot size for bidding is 150 shares. Retail investors will need a minimum investment of Rs 15,000 for one lot, and the maximum permissible investment is Rs 1,95,000 for up to 13 lots. This investment provides exposure to one of India’s emerging infrastructure investment trusts focused on road and highway development.

Capital Infra Trust, sponsored by Gawar Construction Limited (GCL), aims to provide investors with access to a portfolio of road projects, offering both completed and under-construction assets. The trust currently manages 26 road projects, with an additional 9 revenue-generating completed assets spanning 682.43 km. Investors can also benefit from the trust’s right of first offer (ROFO) for acquiring new projects through its sponsor.

IPO Details and Subscription Timeline

The IPO is open for subscription from January 7 to January 9, 2025, and shares are expected to be credited to the demat accounts of successful bidders by January 13. The listing of shares is scheduled for January 14, 2025, on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

According to market sources, the unlisted shares of Capital Infra Trust traded flat on January 7, and its grey market premium (GMP) was reported to be nil, indicating a cautious sentiment in the unlisted market. However, the strong anchor allocation of 45%, amounting to Rs 710.10 crore, suggests institutional confidence in the trust’s long-term growth prospects.

Strong Anchor Investor Interest

The anchor allocation, which concluded on January 6, 2025, saw significant participation from institutional investors. The anchor investors were allocated 7,10,10,000 units, with most subscriptions made at the lower end of the price band at Rs 99 per unit. This reflects the positive outlook from institutional investors about the trust’s portfolio and its strategic position in India’s infrastructure development.

The IPO consists of a fresh issue of 10,77,00,000 units valued at Rs 1,077 crore and an offer for sale of 5,01,00,000 units worth Rs 501 crore. Analysts are paying close attention to the long-term potential of the trust, considering its robust pipeline of highway projects and the backing of a seasoned sponsor like Gawar Construction.

Capital Infra Trust’s Portfolio and Future Outlook

Capital Infra Trust was established in September 2023 to capitalize on the growing opportunities in India’s road infrastructure sector. With its sponsor, GCL, which has over 15 years of experience in road construction across 19 states, the trust is well-positioned to benefit from the government’s increasing focus on road and highway projects.

The trust’s portfolio includes 11 completed projects and 15 under-construction projects, all structured under the hybrid annuity mode (HAM) with the National Highways Authority of India (NHAI). The company has also been rated ‘Provisional CRISIL AAA/Stable’ for its proposed long-term bank loan facility, highlighting its strong financial backing and growth prospects.

Analysts Weigh In

Analysts are cautiously optimistic about the long-term prospects of the Capital Infra Trust IPO. The trust’s focus on road infrastructure, combined with the strategic oversight from its sponsor, gives it an edge in an industry poised for growth due to the government’s ongoing infrastructure push. However, experts note that investors should carefully assess the long-term performance of infrastructure assets, particularly given the nature of the hybrid annuity model and the associated risks.

With institutional interest already reflected in the strong anchor allocation, the IPO is expected to garner significant interest from retail investors as well, especially those seeking exposure to India’s expanding infrastructure sector.

The subscription period for the IPO will conclude on January 9, and investors will be watching closely as the issue nears its final days, with hopes that the trust’s market debut on January 14 will reflect its strong institutional backing and promising future.

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