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.

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.