Target: ₹375

CMP: ₹352.90

Indus Towers delivered a beat on EBITDA, amid strong tower/tenancy addition and reversal of provisioning related to Vi receivables. The fund-raise helped one of Indus’s major customer’s (i.e. Vi) to clear some of its pending dues. The amount was received in April which the company adjusted in its Q4 results

Order book for tower addition looks strong for the remaining year.

Tenancy and tower additions for Indus are likely to stay elevated for the next few quarters, led by rural expansion and capex by Vi for 4G/5G after the ₹20,000 crorefund-raise. Also, 5G will require tower densification as the rollout nears completion, which though will take some more time. We believe that the new tower additions will pick up pace, once the loading of existing towers with 5G radios is complete and data consumption increases, thus requiring more capacity on network. However, this may pan out only over the one to two years.

Reversal of provisioning related to Vi after the fund-raise would improve reported EBITDA margin for the company. As a result, we raise our FY25/FY26 EBITDA estimates by 10/12 per cent, as we adjust for the provisioning reversal.

We increase our DCF-based TP to ₹375/share (₹250 earlier; WACC: 12 per cent; Terminal growth rate: 3 per cent); maintain Add.