InvITs AUM May Cross Rs8 Trillion by FY27

28 Jul 2025 CW Team

While the wave of acquisitions is set to push leverage levels to approximately 50 per cent, credit profiles remain stable, supported by predictable cash flows, long asset lives, and regulatory safeguards. Mature InvITs are poised to contribute 80–85 per cent of the new AUM — a marked increase from 65 per cent over the last two financial years.

The Rs1.7–1.8 trillion in projected AUM addition over FY25 and FY26 will be slightly below the Rs2 trillion added in the prior two-year period. Other sectors — including renewables, transmission, and warehousing — will add modestly to the total due to higher upfront leverage requirements and a limited pool of operational assets.

Manish Gupta, Deputy Chief Ratings Officer at CRISIL, noted, “With most InvITs having achieved operational stability, they are now well-positioned for growth. As a result, leverage is expected to edge up to nearly 50 per cent by FY27.”

Despite the increase in debt, Debt Service Coverage Ratios (DSCR) remain healthy at around 1.7x, only a slight dip from 1.8x in FY23, reflecting the sector’s resilience in absorbing higher leverage without significant deterioration in credit quality. Regulatory provisions — such as the rule requiring six consecutive distributions before exceeding 49 per cent leverage — continue to ensure financial discipline.

Anand Kulkarni, Director at CRISIL Ratings, added, “Even with rising leverage, the inclusion of low-risk assets such as annuity roads and transmission lines allows InvITs to maintain credit strength.”

As InvITs increase in scale and operational complexity, prudent capital structuring will be essential. With long-term cash flow visibility and staggered debt repayments, the sector’s growth outlook remains strong, though vigilant oversight will be crucial.

India’s Infrastructure Investment Trusts (InvITs) are entering a fresh growth phase, with assets under management (AUM) projected to exceed Rs8 trillion by FY27, up from around Rs6.3 trillion in FY25. This rise is largely driven by mature InvITs acquiring high-quality infrastructure assets, particularly in the road sector, which is expected to account for nearly 80 per cent of the incremental AUM.While the wave of acquisitions is set to push leverage levels to approximately 50 per cent, credit profiles remain stable, supported by predictable cash flows, long asset lives, and regulatory safeguards. Mature InvITs are poised to contribute 80–85 per cent of the new AUM — a marked increase from 65 per cent over the last two financial years.The Rs1.7–1.8 trillion in projected AUM addition over FY25 and FY26 will be slightly below the Rs2 trillion added in the prior two-year period. Other sectors — including renewables, transmission, and warehousing — will add modestly to the total due to higher upfront leverage requirements and a limited pool of operational assets.Manish Gupta, Deputy Chief Ratings Officer at CRISIL, noted, “With most InvITs having achieved operational stability, they are now well-positioned for growth. As a result, leverage is expected to edge up to nearly 50 per cent by FY27.”Despite the increase in debt, Debt Service Coverage Ratios (DSCR) remain healthy at around 1.7x, only a slight dip from 1.8x in FY23, reflecting the sector’s resilience in absorbing higher leverage without significant deterioration in credit quality. Regulatory provisions — such as the rule requiring six consecutive distributions before exceeding 49 per cent leverage — continue to ensure financial discipline.Anand Kulkarni, Director at CRISIL Ratings, added, “Even with rising leverage, the inclusion of low-risk assets such as annuity roads and transmission lines allows InvITs to maintain credit strength.”As InvITs increase in scale and operational complexity, prudent capital structuring will be essential. With long-term cash flow visibility and staggered debt repayments, the sector’s growth outlook remains strong, though vigilant oversight will be crucial.

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