Indus Towers’ stock rose 2% following the announcement of a strategic acquisition of telecom towers from its parent company, Bharti Airtel, and sister concern, Bharti Hexacom, valued at Rs 3,308.7 crore. As of 9:28AM, the shares were trading 2.37% higher at Rs 364.55.
The deal will see Indus Towers acquire 12,700 towers from Bharti Airtel for Rs 2,147.6 crore and 3,400 towers from Bharti Hexacom for Rs 1,134 crore. The acquisition, conducted through a slump sale, includes a mix of macro sites, ultra-lean sites (ULS), and Cell on Wheels (COW), excluding sites under the Universal Service Obligation Fund (USOF).
With this acquisition, Indus Towers aims to strengthen its pan-India presence, which currently spans 234,643 towers and 386,819 co-locations as of December 31, 2024.
Brokerage View
Citi has reaffirmed its ‘Buy’ rating for Indus Towers, setting a target price of Rs 490 following a strategic acquisition. The deal is seen as a key move that enhances the company’s capital efficiency and sets the stage for future growth.
Citi highlighted four key positives of this acquisition:
- Improved Capital Structure: Indus Towers’ net debt is minimal at Rs 1,000 crore (as of Dec 2024), strengthening its financial position.
- Prudent Capital Allocation: The acquisition aligns with the company’s core operations, reflecting a smart capital deployment strategy.
- No Impact on Dividends: The debt-funded nature of the deal ensures that dividend payouts remain unaffected, with a forecasted Rs 18/share dividend for Q4FY25.
- Attractive Valuation: The deal is valued at 6.5x EV/EBITDA, a reasonable price considering the industry outlook.
With 5G rollout expected to drive higher tenancy ratios, this acquisition further strengthens Indus Towers’ leadership in India’s telecom infrastructure sector, positioning it well for sustained growth.
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