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India's Infrastructure Investment Trusts (InvITs) are expected to see steady expansion, with assets under management (AUM) projected to reach Rs 7.25-7.50 lakh crore by FY26, according to a report by CareEdge Ratings.
The sector has already witnessed strong growth over the past few years. According to the report, InvIT AUM has doubled from Rs 3 lakh crore in FY22 to Rs 6.25 lakh crore by FY25. The report further noted that the number of InvITs in India has also increased significantly. "The number of InvITs in India has increased from 11 in FY22 to 22 in FY25, with a corresponding increase in AUM to ~Rs 6.25 lakh crore in FY25," it said. However, sectoral diversification within InvITs remains limited, with most investments concentrated in two segments. "AUM remains heavily concentrated in two segments--telecom (~Rs 3.06 lakh crore) and roads (~Rs 2.46 lakh crore)--which together account for nearly 90% of the industry's AUM as of March 31, 2025," the report said. Road infrastructure continues to play a key role in driving InvIT growth, supported by a strong monetisation pipeline of highway assets. The report highlighted that monetisation potential from operational National Highway HAM projects is estimated at around Rs 50,000 crore, with an additional Rs 1.5 lakh crore of projects likely to become operational between FY26 and FY28. Nevertheless, other sectors such as warehousing, transmission and renewable energy are also expected to contribute to diversification in the coming years. Maulesh Desai, Director at CareEdge Ratings, highlighted that the growth will be driven by portfolio expansion across various infrastructure sectors. "InvITs are expected to witness another year of steady growth in FY26, with nearly Rs 1 lakh crore of additional AUM driven by the roads, warehousing, transmission, and renewable energy sectors," he said. Another key challenge for the sector is limited participation from domestic investors. "The sector's credit profile remains robust, supported by diversified, operational asset pools. However, there remains significant potential to enhance creditor protections further and deepen the domestic investor base, particularly given the currently low participation by retail investors, mutual funds, and insurance companies," Desai added. On the other hand, the report noted strong participation from global investors. It said foreign investors hold about 55 per cent of InvIT units, while domestic institutions hold a relatively smaller share of around 7 per cent. CareEdge Ratings also highlighted that equity investments in InvITs have remained robust. "InvIT collectively has a unit capital of ~Rs 1.93 lakh crore as of March 31, 2025, of which ~Rs 88,000 crore of equity has been mobilised over FY23-FY25," the report said. The report expects this trend to continue, with fresh equity raising of about Rs 16,500 crore anticipated in FY26. On leverage, the report said the sector's financial profile remains stable. "Leverage levels are expected to remain stable at around 49% in FY26, aided by valuation gains and continued equity issuances," Desai said. CareEdge Ratings noted that as InvIT platforms continue to scale, maintaining the right balance between growth, valuations and funding access will be crucial to sustaining investor confidence in the sector. (ANI)
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