Brokerages CLSA and Citi have released contrasting notes on Indus Towers, highlighting both structural challenges and potential growth levers for the telecom tower company.
CLSA maintained its high conviction outperform rating but cut its target price to ₹520 from ₹595. The brokerage pointed to the company’s recently approved foray into Africa, beginning with Nigeria, Uganda and Zambia, where Airtel Africa has 37,579 towers, though only 2,157 are owned. Nigeria, Uganda and Zambia together account for fewer than 500 towers, making the diversification move relatively insignificant, in CLSA’s view.
The brokerage said it had expected management to focus on improving Indus Towers’ capital structure by paying out high dividends. While the board has committed to reinstating distributions, CLSA flagged what it termed an “unjustified delay” in dividends.
Citi, on the other hand, maintained a buy call with a target price of ₹460 per share. It said that investor concerns around delayed payouts, Vodafone Idea’s sustainability and Bharti Airtel’s slowing rollouts appear overdone. The brokerage highlighted the potential for medium-term growth and robust free cash flow generation, noting that moderating capex intensity provides ample room for future shareholder returns.
According to Citi, current valuations remain favourable relative to peers. It added that its bear case analysis indicates limited downside risk. The brokerage also underscored Indus Towers’ critical role within Bharti Airtel’s network, calling it a significant implicit backstop. Bharti management has also indicated openness to increasing its stake opportunistically, Citi noted. Any government relief for Vodafone Idea, it added, could trigger a positive chain of events for the sector.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerages and do not represent investment advice.
