SINGAPORE (Oct 27): DBS Group Research is maintaining its “buy” rating on Ascendas India Trust with a higher target price of $1.13 despite declaring a 2Q DPU of 1.37 cents, unchanged from a year ago due to the depreciation of the IDR against the SGD.

DBS analysts Mervin Song and Derek Tan say DPU in line with expectations. DPU had in fact risen 6% in IDR terms, lifted by positive rental reversions and additional income from the newly acquired Cybervale Building 3 in Chennai and aVance Building 3 in Hyderabad. Occupancy across a-iTrust’s portfolio was also stable with overall occupancy at 97%, they added.

The trust manager is also anticipating a 12% to 20% positive rental reversion in Chennai, and a 5% increase in Hyderabad and Bangalore. Eight percent of the trust’s leases are up for renewal for the rest of the financial year to March, and another 30% expire in FY18. Of these, 64% and 42% of the leases expiring in FY17 and FY18 respectively are located in Chennai.

While the analysts are aware that the trust’s share price has rallied by more than 30% since January, they expect investor interest to continue to grow, given the trust’s “healthy 2-year DPU CAGR of 8% and a still decent 5.5% yield”.

Beyond positive rental reversions, the pair also noted that the trust had announced several developments including the construction of The V, a new 408k sq ft IT building, as well as acquisitions of CyberVale, aVance 3 & 4 and BlueRidge Phase 2, which provide “clear growth drivers.

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Furthermore, the trust also has an untapped land bank and sponsor pipeline amounting to 5.9 million sqft of floor area, which Song and Tan believe will provide the trust with a “visible and sustainable source of growth over the long term”.

Shares of Ascendas India Trust are up 1 cent at $1.06 this morning.