Indus Towers shares drop 12% - Find out how big a customer Vodafone Idea is

Based on the related party disclosures of the current financial year, Ambit Capital estimates Vodafone Idea to contribute to a third of Indus Towers' overall revenue and 68 percent of gross trade receivables.

Brokerage firm Kotak Institutional Equities believes that in case India's telecom market is reduced to a duopoly scenario, the fair value for Indus Towers may fall further to Rs 110.

Ambit Capital also said that in case Vodafone Idea happens to exit Indus Towers, the latter's fair value could range between Rs 80 - Rs 130 per share.

Indus Towers does not have many options when it comes to dealing with Vodafone Idea, according to Ambit Capital. The brokerage notes that while Indus Towers can shut down Vodafone Idea's network since it has not been making timely payments, it does not appear to be a practical idea as there are only three surviving private telcos in the country.

Additionally, Vodafone Plc owns 21 percent stake in Indus Towers and also has three seats on the latter's board. Vodafone Plc had pledged its stake in Indus in 2019 to take out loans. Ambit says that valuing Vodafone's 21 percent stake at Rs 7,860 crore will not help in recapitalising Indus Towers.

The only way Indus Towers can see some respite is when Vodafone Idea manages to secure funding, according to Ambit.

Shares of Indus Towers are trading 12.3 percent lower at Rs 138.5. The stock is declining the most in a single day in three years.