Infrastructure InvITs Poised to Hit Rs 8 Lakh Crore AUM by FY27: Crisil Ratings
Crisil Ratings projects that the asset under management (AUM) of infrastructure investment trusts (InvITs) will surpass Rs 8 lakh crore by fiscal 2027, driven by the acquisition of mature assets and stable credit profiles.
InvitsAumCrisil RatingsInfrastructureLeverageReal Estate NewsJul 27, 2025
The report further highlighted that although the growth in AUM will be accompanied by an increase in leverage levels, the credit profiles of InvITs will remain stable. This stability is supported by the good quality of assets, adequate cash flows, and the structural benefits of cash flow pooling and regulatory guardrails.
Asset addition is a key growth driver for InvITs, considering the finite life of infrastructure assets. Over the next two fiscals, the AUM addition is projected to be Rs 1.7-1.8 lakh crore, which is marginally lower than the Rs 2.0 lakh crore added in the past two fiscals. The roads sector is expected to account for 80% of the incremental AUM, similar to the past two fiscals.
While sectors such as renewable energy, transmission, and warehousing will contribute to the incremental AUM, their share is likely to be low due to various factors. These include high upfront leverage of assets that require significant deleveraging under InvITs, sufficient access to capital outside InvIT platforms, and limited availability of operational assets.
Mature trusts acquiring assets are expected to form 80-85% of the incremental AUM over the next two fiscals, compared to 65% in the past two fiscals. Acquisitions typically increase leverage because the assets acquired generally have a higher proportion of debt. For instance, InvITs with a track record of 2-5 years have seen their leverage increase from 43% as of March 2023 to 47% as of March 2025, with a rise in AUM due to acquisitions. With most InvITs attaining operational stability now, they are ripe for growth. Hence, overall leverage is expected to inch up to 50% by fiscal 2027.
Even as leverage is likely to increase, credit profiles are expected to remain stable, supported by predictable cash flows, long asset life, and a diverse pool of assets. The addition of low-risk assets also enables InvITs to withstand higher leverage. For example, adding assets with annuity nature of cash flows, such as hybrid annuity model roads to a toll road trust or power transmission assets to a renewable trust, can enhance InvITs' ability to sustain higher leverage without compromising on credit quality.
With an increase in leverage, the debt service coverage ratio (DSCR) has contracted to some extent for most InvITs, from over 1.8x in fiscal 2023 to 1.7x in recent years. However, despite this moderation, the current DSCR remains healthy. Regulatory guardrails, such as the requirement for six consecutive distributions for increasing leverage beyond 49% and limits on under-construction assets, continue to anchor credit profiles.
Long-term cash flow adequacy plays a crucial role in credit risk assessment. Currently, some trusts are opting for back-ended debt repayments supported by the long life of assets. While this helps InvITs to optimize distributions, gradual amortization of debt remains important over the medium term, considering the finite life of assets.
Overall, while growth and credit outlook remain stable, prudent capital structure management will remain critical as InvITs scale up in terms of size, debt levels, and complexity.
Frequently Asked Questions
What is the expected AUM of InvITs by fiscal 2027?
The asset under management (AUM) of infrastructure investment trusts (InvITs) is expected to cross Rs 8 lakh crore by fiscal 2027.
What is driving the growth in AUM for InvITs?
The primary driver of growth in AUM for InvITs is the acquisition of assets by mature trusts, which are already well-established and have a proven track record in the market.
How will the credit profiles of InvITs remain stable despite increased leverage?
The credit profiles of InvITs will remain stable due to the good quality of assets, adequate cash flows, and the structural benefits of cash flow pooling and regulatory guardrails.
What sectors are expected to contribute to the incremental AUM?
The roads sector is expected to account for 80% of the incremental AUM, while sectors such as renewable energy, transmission, and warehousing will also contribute, albeit to a lesser extent.
What regulatory measures are in place to support the credit profiles of InvITs?
Regulatory guardrails such as the requirement for six consecutive distributions for increasing leverage beyond 49% and limits on under-construction assets continue to anchor credit profiles.
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