India’s infrastructure investment trusts (InvITs) are entering a new growth phase, with assets under management (AUM) projected to cross Rs8 lakh crore by FY27, up from approximately Rs6.3 lakh crore in FY25. This surge is being led by mature InvITs acquiring high-quality infrastructure assets, particularly in the roads sector, which is expected to contribute nearly 80% of the incremental AUM.
While acquisitions are expected to push leverage levels up to ~50%, credit profiles remain stable, thanks to predictable cash flows, long asset life, and regulatory safeguards. Mature trusts are now poised to account for 80–85% of the incremental AUM, a sharp rise from 65% in the previous two fiscals.
The Rs1.7–1.8 lakh crore AUM addition forecasted over FY25 and FY26 will be slightly lower than the Rs2 lakh crore added in the past two years. Sectors like renewable energy, transmission, and warehousing will contribute modestly due to high upfront leverage and limited availability of operational assets.
According to Manish Gupta, Deputy Chief Ratings Officer at CRISIL, “With most InvITs attaining operational stability now, they are ripe for growth. Hence, overall leverage is expected to inch up to approximately 50% by fiscal 2027.”
Despite this, Debt Service Coverage Ratios (DSCR) remain healthy at ~1.7x, down slightly from ~1.8x in FY23, reflecting the sector’s ability to absorb higher debt without compromising credit quality. Regulatory guardrails — such as requiring six consecutive distributions before exceeding 49% leverage — continue to anchor stability.
Anand Kulkarni, Director at CRISIL Ratings, adds, “Even with rising leverage, the addition of low-risk assets like annuity roads or transmission lines helps InvITs sustain credit strength.”
As InvITs scale in size and complexity, prudent capital structure management will be key. With long-term cash flow adequacy and gradual debt amortization in focus, the sector’s growth outlook remains robust — but watchful.
