Reduce Indus Tower: target of Rs 360: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Indus Tower's Q2FY27 tenancy growth was strong at 5.9% YoY, driven by a gross addition of 8,375 and exits of 472.
  • Rental revenue growth was moderate at 3.8% YoY due to a decline in ARPT (down 1.6% YoY), impacted by equalisation accounting, change in tower mix, and renewal discounts.
  • Cash EBITDA grew 3.3% QoQ but dipped 2.1% YoY due to lower other network expenses and drop in energy losses.
  • Capex remains elevated at 28.2% of revenue, supporting tower and tenancy net add, restricting an uptick in EPS.

Thesis Validation Checklist

  • Over the next 12 months, watch for: sustained tenancy net adds, improvement in ARPT growth, and a potential revival in tower additions.
  • Monitor Indus Tower's ability to maintain its market share in new tenancy rollouts and navigate competitive intensity.
  • Keep an eye on the company's cash flow generation and debt levels, given the high capex.
  • Any meaningful value creation from new businesses could be a positive catalyst.