Citi has a “Buy” recommendation for Indus Tower, setting a target price of Rs 500, following the Supreme Court’s dismissal of the AGR curative petition concerning Vodafone Idea. Despite the potential for this ruling to impact market sentiment negatively in the short term, Citi believes it will have no immediate implications for Vodafone Idea’s cash flows, and by extension, Indus Tower’s earnings and free cash flow outlook.
Citi suggests that investors take advantage of any resulting share price weakness as a prime buying opportunity. The brokerage highlights an attractive dividend yield of approximately 6-7%, making the stock appealing to income-focused investors.
Key factors for investors to monitor include:
Vodafone Idea’s Debt Raise: The completion of Vodafone Idea’s ongoing discussions with banks regarding its pending debt raise will be crucial for the company’s financial health.
Reiteration of Capex Plans: Indus Tower is closely watching Vodafone Idea as it finalizes network equipment deals with vendors. Reaffirmation of capital expenditure plans will be vital for future growth.
Repayment of Past Dues: The quantum of past dues that Vodafone Idea repays to Indus Tower in the second quarter of FY25 is expected to rise quarter-on-quarter, especially in light of recent tariff hikes.
