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Motilal Oswal Report
Indus Towers Ltd. reported revenue/adjusted Ebitda growth of 1%/3% QoQ (in line), led by strong tower/rental adds of 7600/7200 and Rs 3 billion in provision write-backs. Rental Ebitda grew 3% QoQ.
Profit after tax growth was strong at 19% QoQ, led by lower power costs, and interest income for delayed payments.
Indus Towers is benefiting from aggressive site adds by Bharti Airtel Ltd. and the 5G rollout. However, since these are single-tenancy sites, they could drive higher capex, which alters the return profile despite adding linear (single tenant) sites and reduces free cash flow.
Further, Vodafone Idea Ltd. weak outlook and limited funding capability could dilute tenancies in the near term and raise concerns about its long-term tower sharing-led business model. Subsequently, we reiterate our 'Neutral' rating.
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