Capacite Infraprojects Ltd Management Discussions

Economic overview

Indian Economy

India continues to remain one of the worlds fastest-growing major economies and the sixth largest economy in the world, supported by resilient domestic demand, strong investment activity, and ongoing structural reforms. In FY26, Indian economy demonstrated resilience amid global geopolitical tensions, trade uncertainties, and financial volatility. The GDP growth for FY26 is estimated at 7.4% compared to 7.1% in FY25, validating the durability of our domestic demand-led growth model. Robust agricultural output supported rural incomes, while urban consumption improved on the back of stable employment, supportive tax measures, and easing inflation.

Private consumption continues to anchor growth, aided by lower inflation and higher real incomes. Investment activity accelerated, led by public capital expenditure of ^12.2 lakh crore, driving growth across manufacturing, construction, logistics, and energy sectors. Initiatives like Viksit Bharat 2047 and Kartavya Kaal promote self-reliance, capacity building, and duty-focused development amid external pressures.

Headline CPI inflation averaged 1.7% during the first nine months of FY2025-26, the lowest level recorded since the current CPI series was introduced. This sustained price stability strengthened household purchasing power, supported consumer demand and reinforced macroeconomic resilience. Looking ahead, inflation expectations remain well anchored,

with the Reserve Bank of India projecting average CPI inflation of 2.0% for the full year. This stability is supported by disciplined government spending, record tax collections, and steady growth in bank credit. The banking sector remains strong with low nonperforming assets and strong capital reserves. This, combined with foreign exchange reserves exceeding $700 billion provides an added cushion against global challenges.

The Union Budget for 2026-27 reinforces the Governments focus on driving economic growth while managing the nations finances responsibly. By continuing to prioritise long-term investments in infrastructure and manufacturing, the budget supports the broader vision of a developed India. Significant emphasis has been placed on energy transition, digital innovation, and support for small and medium-sized enterprises (MSMEs). Additionally, new measures to simplify business operations and improve access to credit are expected to boost consumer demand and industrial production. These initiatives collectively create a strong environment for increased investment and energy consumption, laying a solid foundation for sustainable future growth.

Outlook

The outlook for the Indian economy remains positive and stable. For FY27, real GDP is expected to grow between 6.8% and 7.2%, demonstrating Indias ability to maintain strong momentum even during uncertain times globally. This growth will likely be fuelled by ongoing government spending on infrastructure, a steady increase in private sector investment, and a strengthening manufacturing base. Additionally, the services sector is expected to continue its consistent expansion. Backed by a stable economy and steady government policies, India is well-prepared to manage global challenges while ensuring that economic progress remains inclusive and sustainable over the long term.

(Source: PIB, AngelOne, MoSPI)

Industry review

Indias Construction Sector

Indias construction sector extended its growth momentum in FY26, building on a decade of structural tailwinds from urbanisation, rising government capital expenditure, and recovering private developer activity. Contributing approximately 9% of GDP and employing over 71 million

workers, the sector is the countrys largest private employer and a critical engine of job creation across the income pyramid. The Engineering, Procurement and Construction segment recorded revenue growth of 15 to 18% during the year, advancing from the 12 to 15% growth of FY25. Industry order books stood at approximately 4.0 times annual revenue at year-end, providing strong near-term visibility. Operating margins improved to between 12.5 and 13.5%, supported by stable raw material prices, disciplined project bidding among leading players, and continued execution efficiency gains.

Indias construction market, currently valued at approximately USD 0.79 trillion, is projected to expand to USD 1.10 trillion by 2031, cementing its position as the third-largest construction market globally. This expansion is underpinned by a construction capex pipeline that spans national highways, urban mass transit, railway modernisation, affordable housing, institutional infrastructure, logistics parks, data centres, and industrial facilities, spread across both public and private sector.

The expansion of construction activity across housing, offices, industrial facilities, and infrastructure is sustaining demand for cement, steel, aluminium, glass, and prefabricated building components. Indias construction sector is projected to contribute 10 lakh crore to the economy by 2030 and generate employment for an additional 100 million people. Beyond volume, there is a growing emphasis on quality, sustainability, and building performance, driving adoption of higher-specification materials including fly-ash bricks, autoclaved aerated concrete, low-carbon steel, and advanced waterproofing systems. The PLI schemes across 14 sectors have generated 14 lakh crore in production, created over 11.5 lakh jobs, and driven demand for factory and warehouse construction across electronics, pharmaceuticals, food processing, and logistics.

(Sources: PIB, Invest India, Ministry of Finance, ICRA Construction Sector Outlook FY 2026, CRISIL Research, Mordor Intelligence, India Construction Market)

Indias construction sector is on course to become the worlds third-largest market, with its value projected to grow from approximately USD 0.79 trillion in 2026 to USD 1.10 trillion by 2031. Real estate, the sectors largest sub-category, is expected to expand to USD 4.8 trillion by 2047. The construction industry plays an irreplaceable role in Indias development ambitions under Viksit Bharat 2047, with government estimates pointing to the need for approximately 143 lakh crore of infrastructure investment over the next decade to sustain the targeted economic growth trajectory.

(Sources: Mordor Intelligence, India Construction Market, CREDAI-Colliers India RE Report)

Key Drivers Urban Development

India continues to witness sustained migration from rural to urban areas, driven by employment opportunities, access to education, and improving urban living standards. The United Nations projects that nearly 70% of the worlds population will live in urban areas by 2050, and India alone is expected to add over 300 million new urban residents over the next three decades. This demographic shift is creating durable, large-scale demand for housing, commercial spaces, urban infrastructure, and institutional facilities. Rising household incomes and a growing middle class continue to push demand towards mid-segment and premium residential formats, while

the rapid expansion of High-Net-Worth Individuals and NonResident Indians is sustaining luxury housing momentum in the metro markets.

Urban development in India is no longer confined to the traditional metros. A powerful second wave of real estate demand is building across nine emerging cities profiled by JLL in its September 2025 report, Beyond the Metros: Chandigarh Tricity, Lucknow, Jaipur, Indore, Nagpur, Coimbatore, Kochi, Bhubaneswar, and Guwahati. Together, these cities represent a combined population base of over 25 million, GDP of 9.9 trillion, office stock exceeding 70 million square feet, and logistics and industrial stock of over 80 million square feet. Operating costs in these markets run 25 to 50% below comparable Tier

1 benchmarks, attracting Global Capability Centres, corporate back offices, and logistics operators.

(Sources: United Nations World Urbanisation Prospects, JLL Beyond the Metros September 2025, CREDAI-Colliers India RE Report)

Affordable Housing

Affordable housing represents one of the most significant structural demand gaps in Indias built environment. The country currently faces a shortage of approximately 10 million homes, with demand projected to reach 30 million units by 2030. This gap is most acute in semi-urban and peri-urban regions, where rapid migration, rising aspirations, and improving financial access are converging to create sustained construction activity.

Demand is being supported by deepening financial inclusion, the expansion of digital lending infrastructure, and a maturing housing finance market. Indias housing finance outstanding is projected to grow from USD 379.7 billion to USD 932.3 billion by FY 2030, creating a large and durable pool of home buyer credit that underpins long-term residential demand across income segments.

(Sources: KPMG National Urban RE Development Conclave 2026, Ministry of Finance, PIB, SWAMIH Fund Progress Report December 2025)

Infrastructure Investment

Public capital expenditure remains the most consequential demand driver for Indias construction sector. The 12.2 lakh crore allocated in FY26 spanned national highways, urban metro rail, airport upgrades, railway modernisation, water and sanitation networks, and institutional infrastructure across health and education. The Union Budget for FY27 maintained this trajectory with capital allocation estimated at USD 130 billion, alongside the introduction of an Infrastructure Risk Guarantee Fund designed to attract greater private sector coinvestment into large project concessions.

The pipeline continues to expand in scale and complexity. Seven high-speed rail corridors were approved in FY27, adding multi-year mandates to an already active construction market. The governments continuation of 50-year interest-free capital loans to states, with 1.5 lakh crore allocated in FY26, is catalysing reform-linked state-level infrastructure programmes, broadening the geographic spread of construction activity beyond the metros.

(Sources: Ministry of Finance, GOI; Union Budget 2026-27 Press Notes; PIB Press Releases)

Smart Cities

Indias Smart Cities Mission has entered its consolidation phase after completing its ten-year programme horizon, creating a technology-led urban infrastructure base across 100 designated cities. As per the latest Ministry of Housing and Urban Affairs update placed in Parliament in March 2026, the Mission had achieved 93% completion across 8,063 projects, with Integrated Command and Control Centres operational across all 100 Smart Cities. Earlier programme updates indicate Mission investment of approximately INR1.64 lakh crore, covering smart roads, urban mobility, surveillance systems, public spaces, water supply, waste management, smart classrooms, health centres and digital governance infrastructure. The Mission has also strengthened city-level operating capacity by embedding realtime monitoring, data-led decision-making and integrated civic response systems into urban administration.

The next phase of Indias urban transformation is now being shaped through the 1 lakh crore Urban Challenge Fund, approved by the Union Cabinet in February 2026. The Fund marks a shift from grant-led project delivery to reform- linked and market-financed urban development, with central assistance capped at 25% of project cost and cities expected to mobilise at least 50% of project funding through municipal bonds, bank loans or PPPs. Focused on Cities as Growth Hubs, Creative Redevelopment of Cities, and Water and Sanitation, the framework is expected to catalyse nearly 4 lakh crore of urban-sector investment over five years, creating a deeper pipeline for redevelopment, sanitation, mobility, digital infrastructure and climate-resilient civic assets.

(Sources: Smart Cities Mission Annual Report; PIB; Ministry of Housing and Urban Affairs)

Green and Sustainable Construction

Indias green building sector advanced significantly in FY26. The country climbed to second position globally in the LEED green building ranking by the US Green Building Council in 2025, improving from third in 2024. The Indian Green Building Council has registered over 19,000 projects spanning 15.74 billion square feet of floor area, one of the largest certified green building footprints in the world. Indias green buildings market is projected to grow at a CAGR of 10.5% to reach USD 85 billion by FY 2032.

Demand is increasingly driven by institutional occupiers, global corporations, and ESG-conscious investors that now require green certification as a standard condition for long-term lease commitments. The Energy Conservation Building Code mandates compliance across a growing share of commercial and

institutional developments. Green premium in rental yields and asset valuations is becoming a measurable economic incentive rather than a reputational gesture. Developers are integrating solar panels, rainwater harvesting, high-performance glazing, energy metering, and waste management systems as standard elements of new project design, particularly for commercial, institutional, and premium residential developments.

(Sources: USGBC/GBCI LEED Rankings 2025; IGBC Green Building Footprint Data 2026; KPMG National Urban RE Development Conclave 2026)

Government Schemes Driving Growth Pradhan Mantri Awas Yojana - Urban (PMAY-U)

PMAY-Urban was launched in 2015 to provide safe and affordable homes to urban households. PMAY-U 2.0, approved with central assistance of 2.30 lakh crore for 2024 to 2030, targets 10 million additional beneficiaries. Since inception, 118.64 lakh houses have been approved under the programme, with 88.32 lakh completed, eleven times the 8.04 lakh houses built under predecessor schemes from 2004 to 2014. This scale of delivery has fundamentally changed the affordable housing construction market in India, establishing a steady pipeline of subsidised housing units across urban and peri-urban areas.

SWAMIH Fund

The SWAMIH Fund was established to rescue stressed residential projects and restore delivery to homebuyers locked into stalled developments. The earlier SWAMIH Fund deployed approximately USD 4 billion across more than 120 projects, enabling completion and handover of homes that had been indefinitely delayed. SWAMIH Fund 2, announced in the Union Budget 2025 with a corpus of 15,000 crore, will fund the completion of approximately one lakh additional stressed residential units across the country, reinforcing buyer confidence and sustaining construction activity in the midsegment residential market.

Urban Challenge Fund

The 1 lakh crore Urban Challenge Fund, approved by the Union Cabinet in February 2026, marks a shift from grant-led project delivery to reform-linked and market-financed urban development. Central assistance is capped at 25% of project cost, with cities expected to mobilise at least 50% of funding through municipal bonds, bank loans, or PPPs. Focused on Cities as Growth Hubs, Creative Redevelopment of Cities, and Water and Sanitation, the Fund is expected to catalyse nearly 4 lakh crore of urban-sector investment over five years, creating a deep pipeline across redevelopment, mobility, digital infrastructure, and climate-resilient civic assets.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

AMRUT 2.0, with an outlay of 77,640 crore, is funding water supply, sewerage, stormwater drainage, and urban rejuvenation projects across 500 cities with a combined population exceeding 10 million. The missions focus on ensuring piped water and sewer connections to every urban household is creating a sustained pipeline of civil and infrastructure construction work in secondary and tertiary cities, complementing the housing- focused demand from PMAY.

Pradhan Mantri Gram Sadak Yojana (PMGSY)

PMGSY, launched in 2000, has built 7,71,950 km of all-weather roads since inception, with total spending of 3,31,584 crore. Phase IV of the programme is building road connectivity to 25,000 additional rural habitations previously without allweather access. Improved rural road connectivity drives downstream demand for housing, market infrastructure, and institutional facilities in connected villages and small towns.

Smart Cities Mission (SCM)

The Smart Cities Mission invested 1,64,706 crore across 8,076 projects in 100 cities, of which 7,401 were completed. Projects included smart roads, digital infrastructure, public spaces, transport systems, and urban utilities. Top-performing cities such as Raipur and Indore demonstrated innovative financing mechanisms, including green bonds and land monetisation, setting replicable models for sustainable urban investment. The missions legacy is being carried forward in the Urban Challenge Fund.

Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM)

PM-ABHIM approved construction of 10,609 Block-Less Ayushman Arogya Mandirs, 5,456 Urban Ayushman Arogya Mandirs, 2,151 Block Public Health Units, 744 Integrated Public Health Laboratories, and 621 Critical Care Hospital Blocks across states and Union Territories. The FY27 Union Budget allocated 4,770 crore to PM-ABHIM, a 67.66% increase, with the capital expenditure component of 4,200 crore earmarked for physical infrastructure construction. The Ministry of Health received 1,06,530 crore in total for FY27, crossing the 1 lakh crore threshold for the first time in Indias fiscal history.

(Sources: PIB; Ministry of Finance; Ministry of Health, GOI)

Emerging Technological Trends in Construction Digital Transformation and Smart Planning

The adoption of Building Information Modelling, digital twin technology, and AI-assisted project management accelerated materially in FY26. Leading contractors serving large institutional and commercial clients are now expected to demonstrate BIM capability as a standard qualification condition. AI-based predictive analytics are being deployed for schedule risk management, procurement optimisation, and site safety monitoring. In the commercial real estate occupier community, 92% of surveyed respondents identified AI as the technology most likely to reshape their real estate strategies over the next five years, with direct implications for building design, data centre capacity planning, flex space configuration, and facility management efficiency.

(Sources: JLL Corporate Real Estate Trends to Watch 2026; KPMG Conclave 2026)

Advanced Machinery and Automation

Modern formwork technology, including automatic climbing systems, aluminium formwork, table formwork, and composite panel systems, is driving improvements in construction speed,

Indias Real Estate Market

Indias real estate sector delivered its strongest-ever performance in FY26, sustaining momentum across residential, commercial, and industrial sub-segments while attracting record institutional capital. The sector contributes between 7 and 8% of GDP and is projected to grow to USD 4.8 trillion by 2047, representing approximately 18% of a USD 26 trillion economy. Institutional equity investment into Indian real estate rose to approximately USD 14 billion in CY 2025, according to KPMG, a meaningful step up from USD 11.4 billion in 2024 and a reflection of the sectors growing credibility as a global investment destination. Both the residential and commercial segments hit record milestones, while newer asset classes including data centres and logistics recorded their strongest absorption numbers in history.

Indias real estate sector is poised to play a pivotal role in the countrys goal of a USD 26 trillion economy by 2047. With the sectors contribution to GDP expected to rise from the current 7 to 8% to approximately 18% by 2047, the scale of construction activity that will be required to deliver this transition is extraordinary. Over the next five to six years, real estate is

dimensional accuracy, and structural quality. GPS tracking, telematics, and IoT sensors are improving equipment utilisation and site productivity. Drone-based surveying and inspection are reducing measurement error and enabling real-time progress tracking across large project sites. The adoption of robotic and semi-automated systems for repetitive tasks is gradually addressing labour availability constraints, particularly relevant for high-rise and super high-rise construction where specialised trades are in short supply.

Focus on Green and Energy-Efficient Solutions

Builders are increasingly specifying sustainable materials, fuel- efficient equipment, and construction waste management systems as standard elements of project delivery. Renewable energy integration at the construction stage, water recycling on site, and material circularity practices are becoming expected features of commercial and institutional project planning. These practices reduce both the environmental footprint of construction and the lifecycle operating costs of completed buildings, factors that are growing in importance to project owners and their investors.

Land acquisition by Indias leading residential developers reached approximately USD 5.8 billion in value over the prior two years, signalling strong developer confidence in the forward pipeline. RERA, which had over 1.3 lakh projects and nearly 89,000 agents registered in FY 2025 and over 1.2 lakh complaints resolved since inception, continues to provide the regulatory accountability framework that underpins buyer and investor confidence.

(Sources: KPMG Conclave 2026; CIRIL India Real Estate Market Report 2025; CREDAI-Colliers India RE Report September 2025)

projected to grow at 13 to 15% annually, driven by urbanisation, income growth, infrastructure-led demand, and the emergence of new asset classes. The Governments continued commitment to capital expenditure, affordable housing subsidies, and urban rejuvenation programmes provides the policy foundation for sustained growth across all segments of the sector.

Outlook

(Sources: CREDAI-Colliers India RE Report September 2025; JLL India Outlook 2026)

Government Initiatives

Real Estate (Regulation and Development) Act (RERA)

RERA, enacted in 2016, has become the regulatory bedrock of orderly real estate activity in India. Over 1.3 lakh projects and nearly 89,000 agents are registered under the Act. More than 1.2 lakh complaints have been resolved since inception, reflecting the Acts role as an effective dispute resolution mechanism for buyers. RERA has measurably improved project delivery accountability, raised developer governance standards, and increased institutional investor comfort with Indian residential real estate as an asset class.

Digital India Land Records Modernisation Programme (DILRMP)

Indias land records modernisation programme reached nearcomplete digitisation in FY26. As of the latest MIS 4.0 data, 99.8% of Records of Rights are computerised, 99.9% of subregistrar offices are connected online, and 97.4% of cadastral maps have been digitised. The Bhu-Aadhaar programme has issued 360 million unique land parcel identification numbers, creating a verifiable national registry of land ownership. The National Generic Document Registration System has processed over 30 million documents. These advances materially reduce the risk, time, and cost of property transactions, supporting both formal developer activity and residential market confidence.

(Sources: DILRMP MIS 4.0; PIB Year-End Review 2025: Department of Land Resources)

Production Linked Incentive (PLI) Scheme

PLI schemes across 14 sectors have attracted investments of 1.61 lakh crore, generated production worth 14 lakh crore, and created over 11.5 lakh jobs, driving demand for factory, warehouse, and research facility construction across electronics, pharmaceuticals, food processing, and logistics. Dedicated PLI schemes for medical devices and pharmaceuticals are creating specialised healthcare real estate demand, including manufacturing-adjacent research campuses and sterile processing facilities.

National Data Centre Policy

MeitYs National Data Centre Policy proposes infrastructure status for data centres, single-window clearance, and incentives including subsidised land, power, and tax concessions. Data Centre Economic Zones with plug-and-play infrastructure are being developed to attract hyperscale and enterprise data centre investment. The policy supports green and energy- efficient data centre design, aligning growing construction demand with Indias sustainability commitments.

Benami Transactions (Amendment) Act

The Benami Transactions Act continues to improve transparency in property ownership, reduce speculative activity, and repurpose reclaimed land for productive housing development. By ensuring property titles are registered under rightful owners, the Act supports the formalisation of Indias real estate market and the channelling of reclaimed assets into affordable housing supply.

(Sources: PIB; MeitY; Ministry of Finance)

Indias Commercial Real Estate Market

Indias commercial real estate market delivered its strongest annual performance on record in FY26. Gross office leasing across the top seven cities reached 83.3 million square feet in CY 2025, the highest in Indias recorded commercial real estate history, per JLLs Q4 2025 India Office Market Dynamics report. Net absorption was 57.0 million square feet. The average vacancy rate compressed to 15.2% from prior-year levels, and the fourth quarter of 2025 alone recorded 26.8 million square feet of gross leasing, the highest single-quarter figure ever. Bengaluru retained its position as the dominant market with approximately 30% leasing share, followed by Delhi-NCR and Hyderabad.

Outlook

The commercial real estate market in India was estimated at approximately USD 40.71 billion in 2024 and is projected to grow to USD 106.05 billion by 2029, at a CAGR of 21.1%. This growth reflects the deepening integration of Indias workforce into global knowledge, technology, and financial services industries, the continued attraction of Multinational Corporation back-office and capability centre operations, and a rapid shift in occupier expectations towards Grade-A, green- certified, technology-enabled workplaces.

(Sources: JLL India Office Market Dynamics Q4 2025; CBRE India Market Monitor Q4 2025; Brickwork Ratings Commercial Real Estate India)

106.05

Indias commercial real estate market by 2029 (USD)

Emerging Sub-Sectors in Construction Data Centres

Indias data centre sector entered a construction supercycle in FY26. Total operational colocation capacity across India stood at 1,123 MW as of mid-2025, with a vacancy rate of just 4.3%, the lowest in five years, reflecting intense pre-commitment pressure from hyperscale cloud service providers and financial sector occupiers. H1 2025 absorption grew 48% year on year to 97.9 MW, while supply additions grew 70% year on year to 106.6 MW. Mumbai accounts for 54% of national capacity and contributed 64% of H1 2025 supply additions. The pipeline under construction at mid-year stood at 950 MW, with a further 524 MW in the planned pipeline, implying total data centre capacity will grow approximately 85% to reach 2,073 MW by end-2027.

In real estate terms, the 950 MW under construction will require approximately 10.7 million square feet of specialised built environment and an estimated USD 6.3 billion in capital investment. The Supreme Courts ruling of August 6, 2025, which eliminated the requirement for central environmental clearance for construction projects of 20,000 to 150,000 square metres and confirmed state-level SEIAA approval as sufficient, cleared a significant pipeline of previously stalled data centre developments. Cumulative investment commitments to Indias data centre sector crossed USD 126 billion by end-2025, and KPMG projects the domestic market revenue to reach 1,00,491 crore by 2032.

(Sources: JLL India Data Centre Market Dynamics H1 2025; KPMG National Urban RE Development Conclave 2026)

Industrial and Warehousing

Indias industrial and logistics real estate sector recorded its strongest performance in FY26. Total leasing volume across 24 major cities reached 76.5 million square feet, a 19% increase over the 64.5 million square feet absorbed in the prior year. Third-party logistics and manufacturing together accounted for over 65% of absorption. Grade A warehousing stock across the eight primary markets grew to 183 million square feet at a five-year compound annual growth rate of 21%, driven by e-commerce expansion, manufacturing PLI investments, and the professionalisation of supply chain infrastructure. Industrial and warehousing space addition is growing at 11% year on year in H1 CY 2025. Savills projects that both supply and net absorption could each exceed 80 million square feet in 2026 if current demand continues, and Indias total warehousing stock is projected to reach 700 million square feet by 2028.

(Sources: CIRIL India Real Estate Report 2025; KPMG Conclave 2026; Savills India Outlook 2026)

Healthcare Infrastructure

Indias healthcare construction market is growing rapidly, driven by government programme investment, private hospital group expansion, and new institutional healthcare formats including diagnostic chains, day-surgery centres, and medical colleges. Indias hospital bed density of approximately 1.4 beds per 1,000 people remains well below the WHO benchmark of 3.5 beds per 1,000 people, creating a structural construction demand gap that will require decades to close. The Ministry of Health and Family Welfare received 1,06,530 crore in the FY27 Union Budget, crossing the 1 lakh crore threshold for the first time in Indias fiscal history, representing a 10% increase over the prior years revised estimates. PM-ABHIMs capital expenditure component of 4,200 crore is specifically earmarked for physical healthcare infrastructure construction.

(Sources: Ministry of Health, GOI; PIB PM-ABHIM Progress Update; MedBound Times Union Budget 2026-27)

Trends in Indias Commercial Real Estate Global Capability Centres

Global Capability Centres have become the defining force in Indias office market. The number of GCC units in India crossed 2,975 in 2025, employing 1.9 million professionals and generating an estimated USD 65 billion in annual revenue for their parent corporations. GCC leasing reached a record 31.3 million square feet in CY 2025. India now hosts the GCCs of 28 of the Fortune 50 companies and over 430 of the Fortune 500. The 2025 Union Budgets explicit framework for GCC expansion into Tier 2 cities is creating new commercial real estate demand in markets such as Chandigarh Tricity, Lucknow, Indore, and Coimbatore, where operating costs run 25 to 50% below Tier 1 benchmarks while talent attrition rates are 5 to 15% lower.

(Sources: JLL GCC Office Guide 2026; CBRE India 9M 2025 Office Leasing)

Shift Towards Flexible Workspaces

Flex workspace providers accounted for 26.6% of total office space absorbed in Q4 2025, reflecting the maturation of managed workspace as a mainstream occupier solution. Both global enterprises and Indian corporates are adopting flex formats to manage real estate costs, maintain geographic agility, and meet the expectations of a mobile, project-oriented workforce. Startups, technology firms, and large multinationals alike are choosing managed office solutions that offer shared infrastructure, flexible lease terms, and high-quality amenity environments. Indias flex workspace inventory is expected to grow materially as more landlords enter into revenue-sharing arrangements with operators or develop their own managed workspace brands.

(Sources: JLL India Office Market Dynamics Q4 2025; JLL Corporate Real Estate Trends to Watch 2026)

Technology and Better Infrastructure

New technology is reshaping how offices are designed, built, and managed. Demand for smart, tech-enabled workplaces has accelerated, with building management systems, intelligent access control, loT-based energy management, and Al-powered facility services becoming standard occupier expectations in Grade-A developments. Improving metro rail connectivity, expressway development, and airport infrastructure in Indias major cities are enabling the emergence of new commercial real estate clusters beyond the traditional central business districts, supported by projects such as the Delhi-Mumbai Industrial Corridor and multiple metro network expansions across Bengaluru, Pune, Chennai, and Hyderabad.

Supportive Government Policies and Foreign Investment

RERA, GST rationalisation, and the introduction of Real Estate Investment Trusts have collectively improved the transparency, liquidity, and investment attractiveness of Indias commercial real estate market. Foreign institutional investors continue to deploy capital into Grade-A office parks and logistics assets, attracted by Indias yield differential relative to comparable assets in other Asian markets. The liberalisation of foreign direct investment norms for real estate development and the institutional depth provided by REITs are attracting a broadening pool of global capital into Indian commercial real estate.

Green Incoming Supply Outpacing Non-Certified Spaces

Green-certified commercial buildings now account for the majority of new office supply in Indias leading markets. Global corporations and institutional occupiers routinely require green certification as a prerequisite for long-term lease commitments, and landlords are increasingly retrofitting older stock to meet these requirements. Green office buildings command measurable premiums in both rents and occupancy stability compared with non-certified equivalents, creating a strong economic incentive for the industrys continued transition towards sustainable construction.

(Sources: JLL India Office Market Dynamics Q4 2025; JLL GCC Office Guide 2026)

Indias Residential Real Estate Market

Indias residential real estate market maintained its robust trajectory in FY26. JLLs Q4 2025 India Residential Market Dynamics report recorded 270,323 units sold across the top seven cities, marking the third consecutive year of sales exceeding 270,000 units. Knight Frank India placed the aggregate at approximately 348,207 units across eight cities. The defining characteristic of the year was accelerating premiumisation: homes priced above 10 million expanded their share of annual sales from 53% in CY 2024 to 63% in CY

2025, with the 15 to 30 million segment growing 19% year on year. Average capital values appreciated 6 to 13% across cities, with Delhi-NCR and Bengaluru leading at 13% annual appreciation. New launches across the top seven cities totalled 293,079 units.

Premium housing (above 1 crore) captured 50% of Indias residential sales in CY 2025 for the first time on record. Homes priced above 10 million grew from 53% to 63% of total sales. Chennai recorded 31% year-on-year volume growth, the strongest of any major city in 2025.

The monetary policy backdrop improved materially during the year. The Reserve Bank of India delivered a cumulative 125 basis points of rate reductions during CY 2025, bringing the benchmark repo rate to 5.25%, the lowest in several years. Retail inflation fell to a record low of 0.25% in October 2025, remaining well below the RBIs 4% target for eleven consecutive months. This combination of falling lending rates and subdued inflation has measurably improved home loan affordability and buyer sentiment. Cushman and Wakefield project residential launches to remain above 300,000 units in 2026, and ICRA estimates new project launches across the top seven cities growing 6 to 9% to approximately 620 to 640 million square feet.

(Sources: JLL Residential Market Dynamics Q4 2025; Knight Frank India H1 2025; RBI Monetary Policy Statements 2025; Cushman and Wakefield India Outlook 2026)

Outlook

I ndias housi ng market is expected to sustain its strong trajectory into FY27. New home launches are projected to remain above 300,000 units annually. The narrowing gap between rental yields and home loan EMIs is strengthening the economic case for homeownership, and the growing availability of larger home loan products is enabling buyers to access premium properties in sought-after locations. Developers are continuing to deploy land capital, with approximately USD 5.8 billion in land acquisitions over the prior two years underpinning a robust new supply pipeline.

More buyers are upgrading into the 1 to 2 crore segment, especially in cities where improved infrastructure has opened new residential catchments. Even markets that historically concentrated on mid-range housing are seeing growing interest in high-end and luxury formats. This premium shift is encouraging more buyers to take larger home loans, supporting the housing finance markets long-term growth.

(Sources: JLL Residential Market Dynamics Q4 2025; KPMG Conclave 2026; ICRA Residential Real Estate Outlook)

Key Drivers

Luxury Segment: Sustained Outperformance

At the upper end of the market, homes priced between 4 and 6 crore recorded 85% year-on-year sales growth in the first half of 2025, with approximately 7,000 units transacted per a joint CBRE-ASSOCHAM study. Delhi-NCR accounted for approximately 57% of luxury sales, followed by Mumbai at 17%. Developers launched approximately 7,300 luxury units in H1 2025, a 30% increase year on year. Luxury real estate buyers, predominantly High Net Worth Individuals, Ultra High Net Worth Individuals, and Non-Resident Indians, are largely insensitive to interest rate movements, making the luxury segment one of the most cycle-resilient in the market.

(Sources: CBRE-ASSOCHAM Luxury Housing Report H1 2025; Knight Frank India H1 2025)

Customised Family Homes and Townships Changing the Way People Live

Buyers across segments are showing strong preference for large-format integrated townships that combine homes, offices, parks, retail, schools, hospitals, and hospitality within a single masterplan. Lifestyle completeness has become a more powerful purchase motivator than pure location for a growing share of buyers. These township projects, which typically span multiple phases over five to ten years and deliver millions of square feet of mixed-use construction, represent high-value, long-duration construction mandates for contractors with proven execution capability in complex, multi-programme projects.

Rental Housing is Changing and Becoming More Organised

Rental housing in India is undergoing structural formalisation as an asset class. Institutional investors and listed Real Estate Investment Trusts are beginning to acquire and commission purpose-built rental housing near major employment hubs, student clusters, and senior living markets. Purpose-built student housing, serviced apartments, and co-living formats are attracting dedicated capital from private equity funds. Transit- Oriented Development, which Indias top cities estimate at 106 million square feet of addressable potential across Mumbai (41 million square feet), Delhi-NCR (32 million square feet), and Chennai (13 million square feet), represents a further frontier of residential and mixed-use construction demand.

(Sources: KPMG National Urban RE Development Conclave 2026; JLL Residential Market Dynamics Q4 2025)

Green Buildings Becoming a Regular Choice for Homebuyers

Sustainability features are becoming a buyer expectation rather than a differentiator, particularly in the mid and luxury segments. Solar panels, rainwater harvesting, high-performance windows, energy-efficient appliances, and green certifications are increasingly standard in new residential launches across Bengaluru, Hyderabad, Pune, and Mumbai. This shift is supported by growing regulatory pressure through the Energy Conservation Building Code, rising electricity costs, and buyer awareness of long-term operating savings on utility bills. For developers, the green building premium in resale values and rental rates is providing a commercially compelling reason to invest in sustainable construction practices.

(Sources: JLL Residential Market Dynamics Q4 2025; IGBC; KPMG Conclave 2026)

300,000

New home launches annually in India

Company Overview

Capacite Infraprojects Limited (the Company) was incorporated on August 9, 2012, and listed on the BSE and NSE. The Company is a focused Engineering, Procurement and Construction (EPC) enterprise specialising in building construction across residential, commercial and institutional segments. Its core competency lies in high-rise and superhigh-rise construction, with the ability to deliver end-to-end services covering shell and core works, mechanical, electrical and plumbing (MEP) systems, finishing and interior works. Over its thirteen-year operational history, Capacite has constructed more than 75 million square feet of built space, completed over 100 projects and served over 70 clients across Indias key metropolitan regions.

The Companys promoters, Mr. Rohit Katyal (Executive Chairman), Mr. Rahul Katyal (Managing Director and CEO) and Mr. Subir Malhotra (Executive Director), bring over three decades of combined experience in the construction industry. Their operational philosophy has been one of deliberate focus: Capacite does not diversify into infrastructure verticals such as roads, bridges or industrial projects. This singular focus on building construction has enabled the Company to develop deep technical capability, amassing pre-qualifications, build a specialised equipment fleet and cultivate long-term relationships with the countrys most reputed real estate developers and public sector construction agencies.

The Companys client roster reflects the breadth and quality of this positioning. Government clients include CIDCO, MCGM, MHADA, NBCC, CPWD, IIT Mumbai, IFSCA/GIFT City and IOCL. Leading private sector developers and industrial conglomerates include Oberoi Realty, DLF, Lodha, Godrej, Raymond, Piramal, Signature Global, the Hinduja Group of UK and Saifee Burhani Upliftment Trust, among others. Repeat orders from existing clients are a consistent feature of the order book, serving as an indicator of execution quality and client satisfaction.

Services Portfolio

- Residential buildings: High-rise and super-high-rise shell and core construction; lock-and-key (complete fitout) works; MEP systems integration

- Commercial buildings: Office complexes, malls, hotels, multi-level car parks

- Institutional buildings: Super-speciality hospitals, data centres, factory buildings, metro station structures, educational institutions

- Mixed-use developments: Integrated townships, gated communities, hybrid residential-commercial towers

Strengths

Exclusive Focus on Residential High-Rise Construction

Capacite Infraprojects singular strategic focus on building construction has enabled it to develop specialised technical capabilities, project management systems, and client relationships that general contractors cannot easily replicate. This focused positioning allows the Company to compete on quality and execution reliability rather than on price alone, protecting margins in a competitive EPC market. The Company deliberately avoids infrastructure or commercial projects where its capabilities would be diluted, maintaining sharp operational focus.

Established Track Record

With over 75 million square feet delivered across more than 100 projects during its limited operational history, Capacit e has built one of the most credible execution records in Indias high- rise construction segment. The Companys ability to deliver complex, high-volume projects on schedule for demanding government and private clients has earned repeat mandates and referral-led growth. This track record is reflected in the quality of its order book, which includes projects with average ticket sizes well above the industry norm for residential contractors.

Marquee Client Base

Capacite counts some of Indias most prestigious and discerning project developers among its clients including CIDCO (City and Industrial Development Corporation of Maharashtra), MHADA (Maharashtra Housing and Area Development Authority), and NBCC (National Buildings Construction Corporation). Private developer clients include Signature Global, Godrej Properties, Oberoi Realty, and other leading names. This marquee client base reflects the Companys ability to meet the stringent quality, compliance, and execution standards that large institutional clients demand, and provides a competitive moat against less- established contractors.

Robust Execution Capabilities

Capacite Infraprojects execution backbone consists of a captive Labour Resource Department maintaining a registered database of over 30,000 workmen, an advanced formwork fleet comprising predominantly climbing systems suited for high-rise construction, and a technology platform including eFORCE for workmen management and Building Information Modelling for project planning and co-ordination. These capabilities translate into faster cycle times per floor, better material utilisation, and superior quality outcomes compared with contractors relying on outsourced labour and conventional formwork.

Diverse Project Portfolio

While maintaining sectoral focus on building & factories construction, Capacite has diversified its project portfolio across client types, geographies, and project segments. The

current order book spans CIDCOs mass housing programme at Navi Mumbai, the landmark MHADA BDD redevelopment in partnership, NBCCs residential project in NCR, Signature Globals premium housing in Delhi-NCR, and IIT Mumbai, Hospital in Bhandup for MCGM, Technology centres for National High Speed Rail Corporation etc. This diversity reduces dependence on any single client or programme.

Clear Growth Trajectory

Capacite Infraprojects Vision 2028 targets revenue of 4,000 crore, underpinned by an order book already at 13,498 crore and an order inflow run-rate that exceeded guidance in FY26 (4,446 crore inflows against 3,500 crore guidance). The upcoming activation of CIDCO Location 7 (2,500 crore in outstanding work expected to commence execution in H1 FY27) and the long-duration MHADA BDD JV programme provide a clear multi-year revenue pathway. The Companys mid-term revenue growth targets are well-supported by current order book conversion visibility.

Health and Safety

Capacite deploys a comprehensive Health, Safety and Environment (HSE) framework across all project sites, including mandatory safety inductions, personal protective equipment protocols, regular safety audits, and incident reporting systems. The Companys HSE standards are benchmarked to the requirements of its institutional clients, particularly government bodies such as CIDCO and MHADA, which mandate rigorous site safety standards. Safety performance metrics are reviewed at the management level and form part of project KPIs.

Advanced Formwork Systems

The Companys formwork fleet is a key competitive differentiator. Capacite operates one of the largest and most advanced climbing formwork fleets among Indian residential EPC contractors, enabling faster floor-cycle times and higher concrete pour quality than conventional shuttering. Ownership of formwork (as opposed to renting) reduces project-level costs, improves scheduling flexibility, and eliminates availability risk during peak construction phases. This fleet is systematically deployed across multiple active sites and represents a significant barrier to entry for new competitors seeking to match the Companys execution throughput.

4,000

Capacite Infraprojects Vision 2028 revenue target (crore)

Financial Overview

Capacite Infraprojects Limited delivered steady financial performance in FY26, with revenue for the year reaching 2,623 crore, representing 12% growth over the same period in the prior year reflecting consistent top-line growth driven by strong order execution. EBITDA for the year stood at 427 crore, translating to an EBITDA margin of 16.29%. Profit after tax for period was 193 crore, representing a net margin of 7.30%.

The Company received a credit rating upgrade from IVR BBB-/ Stable to IVR BBB/Stable in August 2025, reflecting improved financial discipline, better working capital management, and a strengthening business profile. Subsequent to the close of the FY 2026, Infomerics Valuation and Rating Limited upgraded the Companys credit ratings to IVR BBB+/Stable (Long-term Bank Facilities) and IVR A2 (Short-term Bank Facilities) on May 12, 2026, which were thereafter reaffirmed on May 19, 2026. Total debt as of 31 st March 2026 stood at 472 crore, with a Debt to Equity ratio of 0.25. The interest coverage ratio of 5.64 for the year reflects adequate debt serviceability despite an elevated debt level versus the prior year, primarily driven by growth- linked working capital requirements.

Key Ratios	FY26	FY25
Debtors Turnover (Days)	164	177
Inventory Turnover (Days)	18	17
Interest Coverage Ratio (x)	5.64	5.76
Current Ratio (x)	1.65	1.81
Debt Equity Ratio (x)	0.25	0.25
EBITDA Margin (%)	16.29%	16.15%
Net Profit Margin (%)	7.30%	8.47%
Return on Net Worth (%)	10.10%	11.85%

Human Resources

The Companys workforce is its most critical asset. As of March 2026, the Company had 1,216 direct employees across project sites and corporate functions, supported by a vast ecosystem of contractual workmen managed through its captive Labour Resource Department.

The Labour Resource Department maintains a registered database of over 6,560 workmen across skill categories, enabling rapid deployment to new projects and ensuring Capacite has better workmen availability for project execution. Workmen are paid on a 15-day wage cycle, significantly faster than the industry standard monthly cycle, which reduces financial stress on labour and improves retention and morale.

The Company invests in structured skills development programmes for workmen, covering core construction skills, safety awareness, and specialised formwork operation. Site supervisors and engineers participate in regular technical training aligned with the evolving demands of high-rise

construction. Leadership development programmes at the management level are designed to build a pipeline of project managers and site heads who can take on increasingly complex projects as the Company scales towards its Vision 2028 targets.

Employee welfare programmes cover group insurance, health and medical support, and access to the Employee Assistance Programme. The Company is committed to fair wages, timely payment, and safe working conditions as fundamental standards of employment at every site.

Corporate Social Responsibility

The Companys Corporate Social Responsibility programme is centred on the communities in which it operates, with a particular emphasis on the welfare of construction workmen and their families. CSR activities during FY26 encompassed skill development and vocational training for underprivileged

youth, health camps and medical check-ups at project sites and nearby communities, educational support for children of workmen deployed at Capacite sites, and environmental initiatives at construction sites including waste reduction and clean surroundings programmes.

The CSR Committee oversees programme design, implementation, and monitoring in alignment with Schedule VII of the Companies Act, 2013. The Company engages with registered NGO partners and implementation agencies to ensure that CSR expenditure translates into measurable community outcomes. During the year, the Company met its statutory CSR obligation under Section 135 of the Companies Act, 2013. Read more about our Corporate Social Responsibility on pages 68 to 69.

Risk Management
The Companys risk management framework is designed to identify, assess, mitigate, and monitor key risks that could affect the achievement of its strategic and operational objectives. The Board, supported by the Audit Committee and senior management, oversees the Companys risk management processes.
Risk	Description	Mitigation Strategy
Labour Risk	Construction activity is labour-intensive, and shortage of skilled and semi-skilled workers could impact project timelines and cost structures, particularly in peak execution phases.	Captive Labour Resource Department maintains a registered database of over 30,000 workmen. Structured onboarding, a 15-day wage cycle, and the eFORCE workmen management app improve labour retention and productivity.
Competition Risk	The EPC market is highly competitive with multiple organised and regional players bidding for large government and private projects, which can exert pressure on margins and order intake.	The Companys exclusive focus on building & factory construction, deep technical expertise in formwork systems, and strong relationships with marquee clients differentiate it from general contractors.
Working Capital Risk	Construction projects require significant upfront mobilisation and involve extended collection cycles, creating working capital intensity. Elevated receivables and WC days (152 days) remain a focus area.	The Company is executing a structured receivables reduction plan targeting WC days of 90 over 2.5 years. Legal and commercial escalation mechanisms are in place for delayed payments.
Geographic Concentration Risk	Approximately 72% of the order book is concentrated in the Mumbai Metropolitan Region, creating dependence on the economic and regulatory environment of a single geography.	The Company has been able to reduce concentration in MMR over years and will actively pursue projects on other geographies meeting the internal project selection criteria.
Financial Risk	Outstanding NCDs represent elevated financing costs relative to bank debt. Contingent liabilities and ongoing working capital intensity could pressure credit metrics if cash collections slow.	Credit upgrade from IVR BBB-/Stable to IVR BBB/Stable in August 2025 and further to IVR BBB+/Stable in May 2026, reflects improving fundamentals. The Company is progressively retiring high-cost NCDs as cash flows improve, targeting a healthier debt mix over the medium term.
Regulatory & Environmental Risk	NGT-directed site stoppages, RERA-related regulatory requirements, and local body approvals can create project execution delays beyond management control.	Strong compliance teams are deployed at each project site. Dedicated RERA and legal cells monitor regulatory requirements proactively. Site-specific health, safety, and environment protocols are maintained and regularly audited.

Internal Control System and Adequacy

Capacite Infraprojects Limited has established a robust internal control framework commensurate with the nature and scale of its business. The framework encompasses financial controls, operational controls, and compliance controls, designed to ensure the reliability of financial reporting, safeguarding of assets, and adherence to applicable laws, regulations, and internal policies.

The internal control system includes comprehensive policies and procedures for procurement, project cost management, billing and collections, payroll, and capital expenditure authorisation. Financial delegation authorities are clearly defined, and multilevel approval processes are in place for commitments above specified thresholds. IT-based controls embedded in the enterprise resource planning system provide transaction-level checks, access controls, and audit trails.

The internal audit function operates independently and reports to the Audit Committee of the Board. Internal audits are conducted on a risk-based plan, covering all major functions and project sites on a rotational basis. Findings, observations, and management responses are reviewed by the Audit Committee, and action taken reports are tracked to closure. The Statutory Auditors have reviewed the internal financial controls and confirmed that they are operating effectively for the purposes of the audit.

During FY26, the Company continued to strengthen its internal control environment through enhanced project monitoring systems, digital integration of site-level financial data with the

head office ERP, and process improvements in the accounts receivable and collections function. No material weaknesses in internal financial controls were identified during the year.

Cautionary Statement

Certain statements in this Management Discussion and Analysis relating to future prospects, outlook, expectations, and objectives are forward-looking statements within the meaning of applicable securities laws and regulations. These statements are based on current expectations, estimates, projections, and assumptions made by the management of Capacite Infraprojects Limited in good faith, using information currently available.

Actual results, performance, or achievements may differ materially from those expressed or implied in such forwardlooking statements due to various factors including, but not limited to, changes in domestic and global economic conditions, government policies and regulatory frameworks, execution risks, labour availability, input cost fluctuations, working capital management outcomes, competition, and force majeure events. The forward-looking statements contained herein are made only as of the date of this report.

The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities regulations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report.