Indus Towers shares have tumbled over 11 percent since the Supreme Court rejected telecommunication companies' plea for the re-computation of adjusted gross revenue (AGR) dues.
According to international brokerage Citi, the correction in Indus Towers' stock price provides investors with an attractive buying opportunity. The stock correction has also brought Indus Towers' valuations back to the long-term mean levels.
On a relative basis, the firm's stock is trading at a 20 percent discount to the only other domestic tower company.
The brokerage reiterated its 'buy' call, with a price target of Rs 500 per share. This implies an upside of 32 percent from the previous session's closing price.
The three key events to watch out for, according to Citi, are Indus Towers' upcoming quarterly results, where analysts will watch out for past dues recovered and a clarity on the outlook for new tenancies; the conclusion of Vodafone Idea's delayed bank funding; along with the waiver by the government of bank guarantee requirement for telecom operators.
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Citi initiated coverage on Indus Towers on September 23. The recent Supreme Court dismissal of the AGR petition is not expected to have an immediate impact on Vodafone Idea’s cash flows; however, it could affect near-term stock sentiment, the brokerage said.
Investors are encouraged to view any weakness in share price as a buying opportunity, especially given the attractive dividend yield of approximately 6-7 percent, said Citi.
The stock has rallied 96 percent in the past one year, almost doubling investors' capital. In comparison, Nifty rose 26 percent.
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