CapitaLand India Trust - OCBC Investment 2024-04-26: Operationally Strong But Ambiguous Growth Outlook

• CapitaLand India Trust (SGX:CY6U)'s 1QFY24 total property income rose by 25% y-o-y, primarily driven by contributions from acquisitions and developments. However, NPI grew by 18% y-o-y, representing a NPI margin of 74%.

Normalisation of property expenses and cost savings from renewable energyplant can lead to margin expansion

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• Looking ahead, with the normalisation of property expenses and cost savings from their renewable energy plant, CapitaLand India Trust could potentially experience NPI margin expansion in the near term.

Upbeat demand for offices, strong momentum in rental growth and robust rental reversions

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• Management is optimistic about the demand in the commercial real estate market and expects to improve its occupancy, particularly for properties with lower occupancy rates such as aVance Hyderabad, Building Q1 and Avance II Pune.
• Rental growth continued its strong momentum on the back of India’s growth, with CapitaLand India Trust clocking positive rental reversions for ITPH (15%), CyberPearl (10%), aVance I (5%), CyberVale (8%) and ITPB (5%).
• We remain positive about the operational performance of CapitaLand India Trust’s assets underpinned by a robust India economy and continued momentum in its commercial real estate demand.

Gearing increased to 37.0% from 35.8%; weighted average cost of debt remained at 6.3%

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2024-04-26 SGinvestors.io

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