CLSA Projects 32% Upside for Indus Towers on Vodafone Idea Relief
Overview
CLSA reiterated its 'High Conviction Outperform' rating on Indus Towers Ltd., setting a ₹565 price target that suggests a 32% potential gain. The brokerage highlights Indus Towers' position to benefit from Vodafone Idea's adjusted gross revenue (AGR) dues relief and ongoing fundraising. With Bharti Airtel expanding its 5G network and Vodafone Idea adding broadband sites, Indus Towers is poised for continued growth, with CLSA forecasting 10-11% annual revenue and EBITDA expansion and a likely dividend reinstatement.
CLSA Reiterates 'Outperform' on Indus Towers, Targets 32% Upside
Indus Towers Ltd. shares climbed on Wednesday after brokerage firm CLSA reaffirmed its 'High Conviction Outperform' rating, projecting a significant 32% upside potential.
The firm maintained a price target of ₹565 on the stock, citing Indus Towers' strategic advantage as a key beneficiary of Vodafone Idea's financial relief and ongoing fundraising efforts.
Beneficiary of Vodafone Idea's Turnaround
CLSA highlighted that Indus Towers, operating a portfolio of 256,074 towers, thrives on its anchor tenants, Bharti Airtel and Vodafone Idea. The brokerage sees Vodafone Idea's relief on adjusted gross revenue (AGR) dues and its capital infusion efforts as direct positives for Indus Towers.
5G Rollout and Expansion Drive Growth
Bharti Airtel's aggressive 5G network expansion continues, with a significant increase in towers and sites over the past 12 months. Vodafone Idea has also bolstered its infrastructure, adding substantial broadband towers since its equity fundraising.
CLSA forecasts incremental tenancies from these dual tenants could reach 68,000 by FY28. This is expected to support core revenue and EBITDA growth for Indus Towers at a compound annual rate of 10-11%.
Financial Strength and Dividend Prospects
The brokerage noted Indus Towers' strong net cash balance sheet. Furthermore, CLSA suggested that a dividend reinstatement by the tower company is likely, adding further appeal for investors.
Analyst Consensus
Among 23 analysts covering Indus Towers, the sentiment remains largely positive. Thirteen recommend a 'Buy', four suggest a 'Hold', and six rate the stock a 'Sell'.
Indus Towers shares were trading approximately 3.51% higher at ₹442.90 on Wednesday. The stock has seen a 4% increase year-to-date.
