CHENNAI: The asset under management (AUM) of infrastructure investment trusts (InvITs) is projected to rise to around Rs 8 lakh crore by fiscal 2027 from approximately Rs 6.3 lakh crore in fiscal 2025, estimates rating agency Crisil Ratings. The increase will be largely driven by asset acquisitions by mature trusts, the rating agency said.
Although this growth will lead to higher leverage, InvIT credit profiles are expected to remain stable, supported by the quality of underlying assets, predictable cash flows, and structural mechanisms such as cash flow pooling and regulatory safeguards.
Asset additions remain key for InvIT growth, given the finite life of infrastructure assets. AUM is expected to rise by Rs 1.7–1.8 lakh crore over fiscal 2025 and 2026, slightly below the Rs 2.0 lakh crore added over the past two fiscals. The roads sector is likely to account for nearly 80% of the incremental AUM, consistent with recent trends.
Sectors such as renewable energy, transmission, and warehousing will also contribute, though to a smaller extent. Their lower share is attributed to factors such as high upfront leverage requiring deleveraging, availability of capital outside the InvIT structure, and limited operational asset inventory.
Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings, said: “Mature trusts are expected to contribute 80–85% of incremental AUM over the next two fiscals, up from around 65% in the prior two. Acquisitions tend to raise leverage as the acquired assets typically carry higher debt. For example, leverage for InvITs with 2–5 years of operations rose from 43% in March 2023 to 47% in March 2025, due to acquisitions. With most InvITs now operationally stable, overall leverage is expected to reach ~50% by fiscal 2027.”
Despite higher leverage, credit profiles are expected to hold steady due to long asset lives, diversified asset bases, and predictable revenue. Addition of low-risk assets—such as hybrid annuity model roads or power transmission lines—helps trusts manage higher leverage without undermining credit quality.
Anand Kulkarni, Director at Crisil Ratings, noted: “As leverage rises, DSCR has moderated to ~1.7x from over ~1.8x in fiscal 2023. The earlier DSCR included a cushion due to lower leverage, and current levels remain adequate. Regulatory measures—such as the requirement of six consecutive distributions before exceeding 49% leverage, and restrictions on under-construction assets—continue to support credit stability.”
However, long-term cash flow adequacy remains a key credit factor. Some trusts are structuring back-ended debt repayments, supported by long asset lives. While this allows for more consistent distributions, gradual debt amortisation will be essential over the medium term, considering asset maturity timelines.
The rating agency however cautioned that while growth and credit outlooks are stable, capital structure discipline will be critical as InvITs expand in scale, leverage, and structural complexity.