Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
NEXTDC Shares Rally on ASX as Funding Update Puts Melbourne Delays in Focus
Highlights
NEXTDC Limited (ASX: NXT) shares traded at a current market price (CMP) of AU$6.100, marking a 6% surge. In an announcement dated 28 October 2026, the data centre operator outlined its debt covenant position while explaining how Melbourne power delays affect contracted earnings calculations.
Financial Buffers Remain Substantial
NEXTDC met both senior debt maintenance covenants at 30 June 2026. Its gearing ratio was 8.2%, compared to a maximum allowance of 60%, reflecting net senior debt of AU$834.3 million and assets valued at AU$10,182.3 million.
The company presented a pro forma interest cover ratio of 5.91 times, compared to the required minimum of 1.5 times. This provided covenant EBITDA headroom of AU$526.8 million, assuming net interest expenses remained unchanged.
Pro forma covenant EBITDA reached AU$706.0 million, including AU$262.1 million before contracted EBITDA and AU$444.0 million in contracted earnings. Net interest expenses totalled AU$119.5 million, while minimum coverage required AU$179.2 million.
The unaudited calculation incorporates an additional 73MW of contracted utilisation announced in July. It differs from the certified June calculation, with associated billing anticipated in FY27’s second half.
Liquidity Supports Funding Plans
At 30 September 2026, liquidity stood at AU$8,675 million, comprising AU$1,275 million cash and AU$7,400 million undrawn funding, subject to customary conditions.
Senior borrowing facilities totalled AU$8,700 million, including AU$2,000 million drawn. Subordinated capital limits amounted to AU$3,550 million, with AU$2,850 million drawn. These subordinated instruments fall outside maintenance covenant calculations.
Separately, JPMorgan Chase & Co. and its affiliates ceased substantial holder status on 23 October 2026.
Outlook Hinges on Delivery
NEXTDC excluded unbilled contracted EBITDA and potential service credits relating to affected M3 Melbourne contracts. The first additional grid supply is indicatively expected during FY28, followed shortly by related customer billing.
Management anticipates covenant compliance at 31 December 2026. However, current headroom does not guarantee unrestricted access to undrawn facilities. Borrowing capacity will depend on drawdown schedules and expected billing dates. Progress at Melbourne therefore remains an important factor for investors monitoring the rally’s durability and future funding flexibility.
Note- All data presented is based on information available at the time of writing.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.Disclosure: The information mentioned above has been sourced from the company reports and a third-party database, i.e. Koyfin. Investors are advised to use strict stop-loss to protect their investments in case of any unfavorable/uncertain market events.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au