Shares of Indus Towers surged 4 percent to Rs 220 per share on January 10 after brokerage firm BofA Securities double upgraded the stock to “buy” and also raised the target price by almost 80 percent on favourable “risk-reward”.
The brokerage raised the target prices to Rs 270 from Rs 148, implying an upside of 28 percent from current levels.
In the past month, the telecom player has surged over 11 percent against a 2 percent rise in the benchmark Sensex. Indus Towers hit a 52-week high of Rs 229 per share on January 5.
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Analysts at BofA Securities said the double upgrade means that the risk-reward is turning favourable. "The potential reduction in capital expenditures or capex would likely lead to improving dividends. We see room for FY25 EV/EBITDA of 5x to re-rate as 5G rollout improves and telcos witness a tariff hike," the brokerage firm said.
Analysts at JM Financial expect Indus Towers to report 5,900 net tenacy additions for the December quarter and 6,200 more towers, primarily driven by Bharti Airtel’s aggressive 5G rollout and rural expansion programme. Rentals are expected to be flat on a sequential basis.
Bharti is Indus Towers’ top tenant and also holds around 47.95 percent stake in the company.
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The brokerage expects revenue to improve 6.7 percent year-on-year to Rs 721 crore in the December quarter but profit after tax (PAT) could see a sharp decline of 292 percent to Rs 136 crore.
“We raise our target price for Indus Towers to Rs 180 per share from Rs 160 due to rolling forward our valuations to March 2025. However, we maintain a 'hold' rating on Indus due to duopoly risks," it said.
The company’s board will meet on January 23 to consider and approve Q3 results and nine-months ended December quarter performance, the management has said.
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