Capital Infra Trust InvIT IPO Review: All You Need to Know : Hello, friends! I’m Ganesh, and today, on January 7th, another IPO has opened for subscription. This one is not your regular IPO; it’s an InvIT IPO—an Infrastructure Investment Trust IPO. Many people are unfamiliar with InvITs, but don’t worry. I’ll explain what they are and how they differ from normal IPOs. Stay with me until the end, as I’ll share whether you should invest in this IPO or avoid it.
Capital Infra Trust InvIT IPO Review
What is an InvIT IPO?
InvIT stands for Infrastructure Investment Trust. It’s a trust formed to manage income-generating infrastructure assets, like roads, highways, or other large projects. These trusts are regulated under SEBI’s InvIT Regulations, which ensures transparency and investor protection. Think of it as something similar to mutual funds, but instead of stocks, the trust invests in infrastructure projects.
The Capital Infra Trust InvIT IPO has a price band of ₹99 to ₹100 per unit. If the IPO is under-subscribed, it will likely list at ₹99. If it’s oversubscribed, it may list at ₹100 or slightly higher. However, don’t expect significant listing gains. InvITs are generally preferred by investors with a long-term view, as they offer steady income through dividends rather than short-term profits.
Sponsor and Background
This trust is sponsored by Gawar Construction Limited, a well-known infrastructure and development company. Gawar focuses on constructing roads and highways, primarily for government and semi-government projects. It operates in 19 states across India and frequently works with the National Highways Authority of India (NHAI).
One remarkable aspect of Gawar Construction is its reputation for completing projects on time—or even before deadlines. This has earned the company bonuses and incentives on multiple occasions. Such a track record adds to the credibility of the trust. However, it’s important to note that the trust was only established on September 25, 2023. This makes it relatively new, and some investors may hesitate due to its short operating history.
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Key Features of the Capital Infra Trust InvIT IPO
Here are some essential details:
- Price Band: ₹99–₹100 per unit
- Lot Size: 150 units (₹15,000 for one lot)
- Issue Size: ₹1,578 crore
- ₹500 crore via Offer for Sale (OFS)
- ₹1,077 crore to the trust for development
Financial Performance
Revenue Trends
The financials reveal a mixed picture.
- FY22: Revenue was ₹1,981 crore.
- FY23: Revenue saw a dip to ₹1,518 crore.
- FY24: Revenue declined further to ₹1,543 crore.
- H1 FY25: Revenue stood at ₹800 crore, showing slight improvement but not significant growth.
The revenue decline from FY22 to FY24 is concerning. While there has been some recovery in FY25, it hasn’t matched FY22’s performance.
Profitability
Despite fluctuating revenue, profits have remained steady.
- FY22: Profit after tax was ₹125 crore.
- FY23: Profit surged to ₹500 crore.
- FY24: Profit dipped but remained around ₹125 crore.
- H1 FY25: Profits showed decent growth compared to FY24.
This stability in profits, despite revenue drops, is a positive sign. However, the revenue decline is something investors should carefully consider.
Comparison with Peers
Capital Infra Trust competes with Bharat Highway InvIT and IRB InvIT. Let’s compare:
- Revenue and Profit:
- Bharat Highway InvIT generates ₹527 crore in profit.
- IRB InvIT earns ₹370 crore in profit.
- Capital Infra Trust earns ₹125 crore in profit from similar revenue levels.
Clearly, Capital Infra Trust lags behind its peers in profitability.
- Market Performance:
- Bharat Highway InvIT, listed at ₹100, now trades at ₹113.
- IRB InvIT, listed at ₹100, now trades at ₹60.
- Capital Infra Trust may face challenges achieving significant listing gains.
Positives and Negatives
Positives
- Steady Income: InvITs provide regular dividends, making them a stable income source.
- Diversified Portfolio: This trust includes multiple projects, reducing risks.
- Sponsor Credibility: Gawar Construction has a strong reputation in the infrastructure sector.
Negatives
- Short Track Record: The trust is less than two years old, which raises questions about its stability.
- Revenue Decline: The dip in revenue over the years is concerning.
- High Debt: InvITs typically carry significant debt, which increases financial risks.
Grey Market Premium (GMP)
As of now, there is little demand for Capital Infra Trust in the grey market. GMP can fluctuate, but currently, it’s not indicating strong listing gains.
Final Verdict
This IPO may not suit everyone. If your investment horizon is less than two years, it’s better to explore other options. However, if you’re looking for steady income and have a long-term perspective, this InvIT IPO could be worth considering.
For those who invest in fixed deposits, this could be an alternative to earn regular dividends with potentially higher returns. Remember, InvITs are not for short-term gains but for creating a consistent income stream over time.
If you’re still unsure, feel free to comment with your questions. Don’t forget to subscribe to the channel for updates on more IPOs. Stay informed and make wise investment decisions.
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