Goldman Sachs (GS) has issued a downgrade on Indus Towers, moving the stock from its previous rating to a “Sell” recommendation. Despite the downgrade, the investment bank has significantly increased its target price for the company from Rs 220 to Rs 350.
Key Points:
- Fundamentals Improvement: GS acknowledges a substantial enhancement in Indus Towers’ fundamentals, leading to an upward revision of their EBITDA estimates by up to 17%.
- Overvaluation Concerns: While the analysts see justification for a higher multiple compared to recent history, they believe the stock’s re-rating has been excessive.
- Growth Outlook Uncertainty: GS expresses limited visibility on Indus Towers’ medium to long-term growth prospects. This uncertainty is attributed to two main factors:
- Vodafone Idea’s (VIL) ongoing market share erosion
- Continued pressure on free cash flow (FCF)
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