Motilal Oswal's research report on Indus Towers
INDUSTOW’s 3QFY23 performance continued to be adversely impacted by VIL. Its inability to raise funds increased provisions (INR23b), revenue equalization write-off (INR663m), and reversal of INR11b in the last quarter. Adjusting for the impact, revenue/EBITDA declined 1% QoQ to INR68b/INR35b, respectively. VIL’s risk of survival puts uncertainty towards Indus Towers outlook. We expect Revenue/EBITDA CAGR of 1%/25% over FY23-25, respectively, with a risk of falling tenancies, despite the optimism around 5G-led tenancy additions. Subsequently, we reiterate our Neutral rating.
Outlook
We factor in a revenue/EBITDA CAGR of 1%/25%, respectively, over FY23-25 to arrive at our TP of INR174, implying an EV/tenancy ratio of INR1.3m and an EV/EBITDA ratio of 3.2x. The stock had garnered a healthy dividend yield of 5%, (FY22) but given the reversal in VIL revenue, not recognizing 3QFY23 revenue and uncertainty in receivables, would pose risk on the company financials. We reiterate our Neutral rating on the stock.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
