Neutral Indus Towers; target of Rs 385: Motilal Oswal

Motilal Oswal's research report on Indus Towers

Indus’ 2QFY25 reported financials came in ahead of our estimate owing to a higher-than-estimated reversal of prior period bad debt provisions (INR10.8b vs. our estimate of INR5b). However, its core operational performance was slightly below with Indus’ recurring EBITDA at INR37.9b (+1% QoQ, +7% YoY), coming in ~2% below our estimate on lower tower net additions and weaker energy spreads. Tower additions further moderated QoQ to 3.7k (vs. our est. 5.5k) on adverse weather events, which also led to moderation in capex (-19% QoQ). With moderation in capex and collection of prior dues, Indus’ 1H FCF was robust at ~INR33b (of which INR27.5b was used for recent buyback).

Outlook

We value Indus on a DCF-based TP of INR385 (implies 7.5x FY27E EBITDA). We reiterate our Neutral rating on the stock.