Analysts at Citi expect shares of Indus Towers Ltd. to gain as much as 21 percent over the next 12 months on the back of two triggers.
Cash-strapped Vodafone Idea has been in the spotlight recently over news surrounding its fund raising plans gathering steam. It also mutually agreed with tower company ATC to delay the issue of Optionally Convertible Debentures from six months to 18 months.
Valuation-wise, there is a disconnect between Indus Towers and its peers, Citi noted. While the Enterprise Value per Tower for Brookfield Data Infra Trust InvIT is Rs 35 lakh, its Rs 25 lakh for Indus Towers.
In case of Enterprise Value to EBITDA, Brookfield Data Infra InvIT is at 10.7 times, while for Indus Towers, its at 4.5 times. "The valuation disconnect is hard to explain, even after accounting for Vodafone Idea's share of 30 percent in tenancies," Citi said.
In an investor call after the announcement of June quarter results, the top management stated that Vodafone Idea would commence vendor payments, owed to Indus Towers and others, from the third quarter of financial year 2024.
Indus Towers reported a 2.6 percent growth in gross revenue to Rs 7,080 crore in the June quarter due to a 2.7 percent expansion in core or rental income and strong Towers additions.
Shares of Indus Towers are trading 2.1 percent higher at Rs 176.25. The stock is down 7.2 percent so far in 2023.
