ICICI Securities maintained a reduce rating on Indus Towers with a target price of Rs 360. While Q2FY27 tenancy grew by 5.9% year-on-year, rental revenue growth stayed moderate at 3.8%. High capital expenditure currently restricts earnings per share growth, even as the company continues to see strong order bookings for future.
ICICI Securities research report on Indus Tower Indus Towers (Indus)' Q2FY27 tenancy grew faster at 5.9% YoY; however, rental revenue growth was moderate, at just 3.8%, due to a decline in ARPT (down 1.6% YoY). Cash EBITDA grew faster QoQ at 3.3% (dipped 2.1% YoY) due to lower other network expenses, and drop in energy losses on seasonality. Rental cash EBITDA grew 2.4% QoQ. Capex remains elevated (28.2% of revenue), supporting tower and tenancy net add, which is restricting an uptick in EPS on faster growth in D&A (7.9% YoY); also, impeding FCF generation. Indus continues to garner strong order booking, improving visibility for sustained tenancy net add in FY27, which is broadly estimated; however, earnings growth remains capped.
Outlook We tweak our EPS estimates and DCF-based TP to INR 360 (vs. INR 350). Maintain REDUCE. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Indus Tower - 2810026 - icici