DBS Group Research and Jefferies on Thursday (Jan 27) lowered their target price (TP) for Ascendas India Trust CY6U : CY6U 0%to S$1.70 and S$1.65 respectively, from a previous TP of S$1.80.

This comes after the trust posted a lower distribution per unit (DPU) of S$0.078 on Wednesday for the financial year ended Dec 31, 2021, some 11 per cent less than the DPU of S$0.0419 in the year-ago period.

However, both brokerages maintained a "buy" call on the trust on account of projected improvements in portfolio occupancy, its pipeline of acquisitions and its position as an emerging data centre player.

Units of Ascendas India Trust closed at S$1.28, down 7.3 per cent or S$0.10, on Thursday.

Jefferies analyst Krishna Guha said he lowered his estimates and TP by taking into consideration the impact of higher borrowing and tax rates, as well as the higher cost of equity.

Yet, his view is that Ascendas India Trust will benefit from a "record" hiring of IT graduates, a pick-up in leasing momentum and its pivot to new economy assets, which include building 2 new data centres in Bangalore and Hyderabad.

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"The rate of decline (for portfolio occupancy) is slowing. With leasing momentum picking up, we think vacancy is cresting," he said, adding that the trust's portfolio occupancy declined slightly to 88 per cent from 89 per cent in Q3 2021.

DBS Group Research analyst Derek Tan said he cut his estimates by 11 per cent to 17 per cent due to the lowering of rental and occupancy assumptions, delay in acquisitions, a higher Singapore dollar and Indian Rupee, as well as higher tax rates.

That said, for Tan, the trust still offers an "attractive" compound annual growth rate of 11 per cent in DPU from FY2022 to FY2024.

"While a near-term earnings disappointment due to transitionary vacancies may occur, we believe that we are past the trough. With signs of leasing discussions restarting and acquisition and construction momentum gaining speed, we believe that 2022 will be a much better year for Ascendas India Trust," he said.

The analyst noted that the trust is positioned as a new economy play with future development projects in IT parks, warehouses, and data centres. An overall commitment of close to S$1 billion over the next 4 to 5 years is expected to drive a 50 per cent rise in assets under management (AUM).

In Tan's view, the trust's acquisition pipeline remains "robust", with a total expected consideration of S$976 million for its pipeline properties over 8 projects, though he cautioned potential delays in the completion of projects.

Its portfolio reversions also remain positive, ranging between 1 per cent and 10 per cent for leases signed, the analyst observed.

Looking ahead, Tan pointed out that the trust's manager remains "confident" to retain a substantial portion of leases in FY2022. A majority of the expiring leases in FY2022 are from Bangalore and Hyderabad, which are markets where expansionary demand remains "robust".

READ MORE: Ascendas India Trust H2 DPU down 14% to S$0.036