March 31, 2023

Indus Towers drops 10% in a month and reaches a 52-week low in a stable market

Shares of Indus Towers slipped 3 per cent to hit a 52-week low of Rs 177.10 on the BSE in Tuesday’s firm intra-day trade. Analysts said an improvement in Vodafone Idea’s long-term revenue visibility might lead to additional increases in earnings expectations.

The board of Indus Towers is scheduled to meet on January 24, 2023 to consider and approve the audited financial results for the third quarter (Q3) and nine months ended on December 31, 2022. In the past one month, the stock has declined 10 per cent as compared to a 1.4 per cent fall in the S&P BSE Sensex.

Indus Towers is India’s leading provider of passive telecom infrastructure and it deploys, owns and manages telecom towers and communication structures for various mobile operators. The company’s portfolio of over 187,000 telecom towers makes it one of the largest tower infrastructure providers in the country.

For the second quarter of FY23, Indus Towers saw a 44 per cent drop in net profit to Rs 872 crore. Revenue for the period grew 16 per cent on a YoY basis to Rs 7,967 crore but profit declined due to challenges in recovery of dues from Vodafone Idea.

Indus Towers had a difficult year with receivables from VIL, its second largest tenant, increasing. This resulted in Indus Towers lowering its dividend payout. During the quarter, the company registered a net addition of 1,452 macro towers and 1,746 corresponding co-locations.

Management said that VIL has presented a payment plan in which the company has agreed to clear its past dues by first half of 2023. However, it believes VIL’s ability to service its liabilities will depend on its ability to raise funds. Further consolidation of the Indian telecom industry is a downside risk for Indus.

Tenancy addition will largely be led by Airtel’s 5G rollout, according to ICICI Securities. Rental revenues likely to be down 9.8 per cent QoQ but up 1.9 per cent on adjusted basis as Q2 had one-time provision reversal benefit.

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