- EBITDA rose 2% QoQ to INR 44.7 bn, matching analyst forecasts.
- Tenancy additions rebounded thanks to accelerated roll‑outs by a key customer, Vi.
- Indus now claims roughly 70% of Vi’s new tower deployments since Q2 FY25.
- Motilal Oswal lifts its DCF target to INR 425, with a balanced risk‑reward profile.
- Bull case envisions a price near INR 490; bear case around INR 395.
You missed the hidden upside in Indus Towers' latest earnings.
Why Indus Towers' EBITDA Growth Beats the Sector Drag
Indus Towers reported a 2% quarter‑over‑quarter increase in recurring EBITDA, reaching INR 44.7 billion. While the percentage looks modest, the absolute figure represents a solid ~INR 900 million uplift from the prior quarter. In a market where many tower owners are grappling with tariff pressure and slower tenant expansion, maintaining positive EBITDA momentum is a clear sign of operational resilience.
EBITDA—earnings before interest, taxes, depreciation, and amortisation—is a key proxy for cash‑flow generation in capital‑intensive businesses like tower infrastructure. By stripping out non‑cash provisions, analysts get a cleaner view of a firm’s ability to service debt and fund new tower builds without diluting shareholders.
Impact of Vi's Accelerated Roll‑Out on Indus Towers' Tenancy Numbers
The quarter saw a notable pickup in tenancy additions, primarily driven by Vi’s aggressive network expansion. Although Indus' share of Vi’s new tenancy appears smaller in raw numbers, management clarified that several newly commissioned towers were built expressly for Vi, preserving a high share in the operator’s rollout pipeline.
Since Q2 FY25, Indus has captured roughly 70% of Vi’s tower deployments—a figure that underscores the depth of the partnership. This dynamic is crucial because Vi is one of India’s largest mobile operators, and its 5G push is expected to double tower demand over the next three years.
Sector Trends: Tower Consolidation and 5G Catalyst
India’s telecom tower sector is undergoing rapid consolidation. The government’s push for a unified, high‑density network to support 5G has spurred mergers, asset sales, and strategic partnerships. The overall tower count in the country is projected to climb from ~180,000 today to over 250,000 by 2028, according to industry forecasts.
Indus Towers, along with peers like Tata Telecom Tower and Bharti Infratel (now part of the merged tower entity), is positioned to benefit from shared‑infrastructure mandates. However, each player faces distinct challenges: Tata Telecom Tower is deepening its joint‑venture model with operators, while Bharti’s legacy assets are being integrated, creating short‑term execution risk.
Competitor Analysis: How Tata and Adani Are Positioning Themselves
Tata Telecom Tower has recently announced a strategic alliance with Reliance Jio to co‑locate 5G equipment on existing towers, aiming to boost tenancy rates by 12% YoY. This move could erode Indus' market share in regions where Tata’s footprint is dominant, especially in western India.
Adani Enterprises, while not a pure‑play tower owner, is entering the telecom infrastructure space through a joint venture with a global tower operator. Their deep pockets and aggressive capex plans may introduce new competitive pressure, particularly in Tier‑2 and Tier‑3 cities where the growth curve is steepest.
Historical Context: What Past Earnings Surprises Tell Us
Looking back at Indus’ FY23 Q4 results, a surprise EBITDA beat led to a 15% stock rally, as investors re‑priced the company’s ability to monetize the 4G‑to‑5G transition. Conversely, a muted Q2 FY25 where tenancy growth stalled saw the share price dip 8%, highlighting the market’s sensitivity to tenant activity.
The current quarter mirrors the FY23 scenario—steady earnings coupled with a tenant‑driven tenancy surge—suggesting a similar upward price pressure could re‑emerge if the momentum sustains.
Technical Snapshot: Valuation Mechanics Behind the New Target
Motilal Oswal’s revised DCF (discounted cash flow) target of INR 425 is built on a 6.5x FY28E pre‑IND AS EBITDA multiple. This multiple reflects a modest premium over the sector average of 6.0x, justified by Indus’ superior tenant mix and higher projected capex efficiency.
For context, a 6.5x multiple applied to an estimated FY28 EBITDA of INR 65 bn yields an enterprise value of INR 422.5 bn. Subtracting net debt of roughly INR 35 bn arrives at an equity value that translates to the INR 425 per share target.
Investor Playbook: Bull vs. Bear Scenarios
Bull Case (Price Target ~INR 490): Continued acceleration in Vi’s 5G rollout, successful acquisition of new tenants from emerging regional operators, and a sector‑wide uplift in tower leasing rates could push EBITDA growth to 10% YoY by FY28. A higher EBITDA multiple (≈7.0x) would validate the INR 490 level.
Bear Case (Price Target ~INR 395): Any slowdown in Vi’s capex, heightened competition from Tata Telecom Tower’s joint‑venture model, or regulatory delays in tower sharing mandates could compress tenancy growth, forcing the EBITDA multiple down to ~6.0x.
Given the current risk‑reward balance, a neutral stance with a focus on price action around the INR 425 target appears prudent. Investors may consider a phased entry—accumulating on dips near INR 400 and trimming near INR 470—to capture upside while managing downside exposure.
Stay vigilant on quarterly tenancy reports and any policy shifts around 5G tower sharing; these will be the early indicators that determine which side of the trade you end up on.