'Subscribe' For Smooth Road Ahead: Capital Infra InvIT IPO Gets Emkay's Thumbs Up

The initial public offering of Capital Infra Trust Ltd. provides a compelling opportunity for investors looking to ride the growth wave of India's road infrastructure sector, says Emkay Global Financial Services. Backed by sponsor Gawar Construction's strong track record and a portfolio of nine operational hybrid annuity model assets spanning 682 kilometres, Emkay recommends subscribing to the Rs 1,578-crore IPO.

Capital Infra's HAM model removes the volatility of toll collection, offering investors predictable and steady returns, according to the brokerage. The projects are geographically diversified across seven states and boast a weighted average concession life of 11.7 years, it said.

Emkay holds that GCL is a leading name in road construction, with 26 HAM projects in its portfolio, providing Capital Infra a right of first offer for future projects. The brokerage said that this will ensure a steady pipeline of acquisitions and long-term growth.

Revenue from operations of the Trust grew 6.54% from Rs 1,908.15 crore in fiscal 2022 to Rs 2,033 crore in fiscal 2023.

Capital Infra's assets span key states such as Rajasthan, Karnataka, and Himachal Pradesh, reducing over-reliance on a single project or geography. With GCL currently developing an additional 546 km of roads, the Trust is well-positioned to expand its portfolio further, says the firm.

The Trust primarily intends to acquire, manage and invest in the nine completed and revenue generating road assets.

With its solid financials and well-diversified portfolio, Emkay labels this IPO a 'subscribe.'

• Issue opens: Jan. 7.

• Issue closes: Jan. 9.

• Price band: Rs 99-100 per share.

• Fresh issue size: Rs 1,077 crore.

• Offer-for-sale: Rs 501 crore.

• Total issue size: Rs 1,578 crore.

• Lot size: Minimum 150 shares, and then in multiples thereof.