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Investing.com - Morgan Stanley initiated coverage on Knowledge Realty Trust (KRT:IN) with an Overweight rating and a price target of INR122.00 on Monday.
The rating is supported by India’s strong office market, which has seen new leasing of 54.3 million square feet (up 23% year-over-year) and rental growth of 6.3% year-over-year in the 12-month period ended June 2025, driven by Global Capability Centers (GCCs).
Morgan Stanley expects this momentum to continue, with GCC expansion projected at 1.3x by FY30, citing India’s competitive advantages in low cost and quality talent pool. The firm also noted that an RBI rate cut cycle and REITs’ defensive profile amid market volatility should provide additional support.
The Securities and Exchange Board of India (SEBI) reclassified REITs as equity from hybrid last week, which Morgan Stanley believes should lead to increased REIT holdings by Indian mutual funds.
As the largest office REIT in India, Knowledge Realty Trust offers a high tax-free dividend yield (62-76% tax-free), stable contracted long-term cash flows with annual escalations of 4.5-5.0%, and potential upside from re-leasing at market rates, lease-up of vacant areas, and future development assets of 9.4 million square feet.
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