Brokerages Cheer Indus Towers’ Tenant, Tower Additions In Q4
A plane flies over a telecom tower. (Photographer: Susana Gonzalez/Bloomberg)  

Brokerages Cheer Indus Towers’ Tenant, Tower Additions In Q4

Indus Towers Ltd.’s profit rose in the three months ended March, the first full quarter of operations after its merger with Bharti Infratel Ltd., helped by higher exit penalties, tenant additions and reduced expenditure.

The tower company’s net profit rose 38% year-on-year to Rs 1,364 crore in the January-March period, according to a company statement. That compares with the Rs 1,271-crore consensus forecast of analysts tracked by Bloomberg.

  • Its consolidated revenue increased 3% to Rs 6,492 crore, against the Rs 6,435-crore estimate.

  • Total expenditure fell to Rs 3,079 crore in the reported quarter against Rs 3,452.7 crore a year ago.

  • Higher tower/tenant additions and decline in other expenses aided the company’s operating income in the fourth quarter.

The merger of Bharti Airtel Ltd.’s tower arm with Indus Towers was completed in November last year. Prior to the merger, Indus Towers was jointly owned by Bharti Infratel (42%), Vodafone Plc. (42%), Vodafone Idea Ltd. (11.15%) and Providence (4.85%).

After the deal, Vodafone Idea sold its stake in the telecommunications tower company. Bharti Infratel now owns 36.7% of Indus Towers, British operator Vodafone Group 28.1%, and the rest is held by investors including KKR & Co. and Canada Pension Plan Investment Board.

Here’s what analysts have to say about Indus Towers’ fourth-quarter results...


  • Higher-than-expected exit penalties, and lower spends on charity and donations have helped boost net profit.

  • 3,700 tower additions were the highest ever in a quarter.

  • Strong tower additions drove gross tenancy additions of 5,024—the highest in more than three years.

  • The tenancy ratio moderated due to higher growth in tower base.

  • Margin expansion from current levels is unlikely unless Indus Towers can increase its tenancy ratio.

  • The stock offers limited growth over FY21-23 but has an attractive dividend yield of 6.5% for FY23.

  • Maintains ‘hold’, and increases earnings estimates by 3-5% to factor higher exit penalties and other income.

ICICI Securities

  • Ebitda was 10% higher than expectations due to lower-than-expected energy losses, lower other expenses and negligible CSR cost.

  • Net tenancy additions were higher due to higher tower additions.

  • Concerned about the sustainability of strong tenancy additions as Bharti Airtel/Reliance Jio recently bought large quantity of spectrum, which may impact capacity-led tenancy demand.

  • Vodafone Idea’s going concern risk has also not receded.

  • Maintains ‘hold’, and increases Ebitda estimates by 1-2% for 2021-22 and 2022-23.


  • Gross tenancy additions increased 8% year-on-year and 10% quarter-on-quarter.

  • FY21 operating free cash flow of Rs 7,100 crore (up 1% YoY) despite capex of Rs 3,600 crore (up 13% YoY).

  • Indus growth is improving with the ongoing data boom and the company is trading at a compelling valuation of 6 times EV/Ebitda for 2021-22.

  • Indus valuations are at a 65% discount to the global peer tower valuations.

  • Rates ‘buy’ and lifts earnings estimates by 1-8% for the year 2021-22 and 2022-23.

Motilal Oswal

  • Rental revenue fell 4% quarter-on-quarter due to a 5% decline in rentals per month per tenant.

  • The energy revenue fell 3% sequentially to Rs 2,350 crore.

  • The company had a net debt of Rs 5,800 crore at the end of FY21.

  • The capex for 4QFY21 stood at Rs 1,290 crore compared with Rs 1,090 crore in the third quarter.

  • Rates ‘neutral’ due to in line revenue and strong tenancy additions.

Dolat Capital

  • Q4 performance was marginally better led by higher tower/tenants additions.

  • Tower additions are healthy for the third consecutive quarter.

  • Tower additions have lagged the tenancy ratio and thus increase the risk of pulling down margins and return ratios.

  • Survivability of Vodafone Idea is on a weak footing and poses a severe business risk to Indus.

  • Company also faces a risk of re-negotiation of rentals as tenancies come out of lock-in in FY23 as also exit penalties get over.

  • Rates ‘accumulate’. The stock currently trades at 12.5 times 2022-23 EPS.

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