Indus Towers shares jump 10% post Q4 results. Should you buy, sell or hold?

Shares of Indus Towers jumped 10% to Rs 159.2 in Friday's trade on the BSE. Its fiscal fourth-quarter net profit fell 23% on-year as the telecom infrastructure provider continued to pay doubtful dues from its largest customer Vodafone Idea.

Indus’ profit for the January-March quarter was Rs 1,399 crore compared to Rs 1,829 crore in the same period last year. Its revenue for the March quarter was Rs 6,753 crore, down 5% from the March 2022 quarter (Rs 7,116 crore).

The tower company made an incremental provision of Rs 43.4 crore towards doubtful debt in the January-March period, after Vodafone Idea (Vi) warned of likely challenges in meeting future payment commitments. This brings the cumulative allowance for doubtful receivables as on March 31 to Rs 5,453.3 crore.


Vi’s total dues to Indus are estimated around Rs 7,000 crore, with industry executives pegging the cash-strapped telco’s recurring monthly dues to the tower company in an upward trend of Rs 500 crore.

At 10.08 am, the stock was trading 8.2% higher at Rs 156.7 on the BSE. In the last one year, it has fallen over 25%.

Should you buy, sell or hold Indus Towers' stock? Here's what analysts say:

Reliance Securities
Reliance Securities reiterated its ‘buy’ rating on Indus Towers with a target price of Rs 175.

"Post better-than-expected tower addition in 4QFY23, factoring better tower addition and rental yield, we increase our revenue estimates by 3%/4% for FY24E/FY25E. Considering higher rentals and lower energy cost, we slightly increase our EBITDA margin estimates by 23bps and 24bps for FY24E and FY25E, respectively. Accordingly, we revise the earnings estimate by +2%/flat for FY24E/FY25E," it said.

Motilal Oswal
Motilal Oswal reiterated its ‘neutral’ rating on Indus Towers with a target price of Rs 160.

"We expect Revenue/EBITDA CAGR of 1%/25% over FY23-25, with the risk of falling tenancies, despite the optimism around 5G-led tenancy additions. VIL’s risk of survival and its weak return profile with single-digit ROCE has created uncertainty regarding the outlook for Indus Towers," it said.

Kotak Securities
Kotak Securities retained its ‘reduce’ rating on Indus Towers with an unchanged target price of Rs 140.

"We raise FY2024E EBITDA by ~2% on contribution from leaner towers and FY2025E EBITDA by higher 14% as Vi would likely have lower external due repayments in FY2025E and could theoretically increase payouts to Indus. However, without expedited fund raise/sharp tariff hikes, Vi’s survival would remain an uphill battle and duopoly in the Indian telecoms is the most likely outcome, in our view," it said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)