Indus Towers Ltd., incorporated in the year 2006, is a Large Cap company (having a market cap of Rs 59854.55 Crore) operating in Telecommunications sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 6853.90 Crore, up 4.34 % from last quarter Total Income of Rs 6569.10 Crore and up 314.91 % from last year same quarter Total Income of Rs 1651.90 Crore. Company reported net profit after tax of Rs 1415.30 Crore in latest quarter.
Investment Rationale
The long-term network upgrade opportunity in the Telecom sector towards 5G, fiberization, small cells, and indoor coverage would continue to drive growth in the Telecom Passive Infrastructure industry. Recovery in tenancy adds and a reduction in exits have also brought about stability in earnings. However, FY23E onwards, the exit penalty receipts from VIL would reduce. Furthermore, its situation remains precarious, weighed by ballooning debt and its inability to raise funds and improve its liquidity. This remains the biggest overhang for Indus Towers as VIL remains a large client and the Tower-sharing business has a limited business case for single-tenancy operations. On the other hand, the threat from RJio’s increased focus in the Tower Infrastructure space may weaken Indus’ positioning. The brokerage factors in a revenue/EBITDA CAGR of 5.1%/6.8% over FY21–23E and arrive at TP of INR250 – implying EV/tenancy of 2m and EV/EBITDA of 5.7x. The stock garners healthy dividend yield of 10.4%, which could cushion against a further downside.
Promoter/FII Holdings
Promoters held 69.9 per cent stake in the company as of June 30, 2021, while FIIs held 26.8 per cent, DIIs 2.7 per cent and public and other 0.7 per cent.
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