Indus Towers - Builds Optimism On Rural Expansion By Airtel, 4G Rollout From Vodafone Idea: ICICI Securities

ICICI Securities Report

We have retained our estimates for Indus Towers Ltd., and DCF-based target price of Rs 270. Our model assumes Indus’ cash Ebitda to grow at CAGR of 7% over FY24–31E; terminal growth estimated at 2.5% and weighted average cost of capital is 12.1%.

At target price, Indus’ implied valuation works out to 5.4 times FY26 enterprise value/adjusted Ebitda and 10.5 times FY26E EPS. Maintain Sell.

Upside risks:

1. Sustained expansion of tenancies from Bharti Airtel Ltd. and Vodafone Idea Ltd.

2. New business shaping up and adding materially to revenue/earnings, such as data centre, fibre leasing etc.

3. Higher-than-expected Ebitda margin and free cash flow generation.

Downside risks:

1. Vodafone Idea losing going concern status;

2. Higher competitive intensity, and lower-than-expected incremental Vodafone Idea’s tenancy market share.

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