Accumulate Indus Towers Ltd for Target Rs 491 by Elara Capital
5G, VI revival, and AU entry to underpin growth
Accelerating 5G adoption and rising data use in India would drive sustained demand for network densification, increased equipment loading, small-cell & IBS infrastructure deployment benefitting Indus Towers (INDUSTOW IN). A capex revival and improving liquidity at Vodafone Idea’s (VI) (IDEA IN, Not Rated, CMP: INR 15) should bolster tenancy additions and lower receivables risk, supporting high site-level utilization. Additionally, INDUSTOW’s measured entry into the African Union (AU) expansion, anchored by demand from Airtel Africa, and the company’s experience in a mature outsourced tower market creates a durable avenue for geographic diversification and long-term revenue growth. Together, these factors support a multi-year runway for revenue growth, tenancy expansion, and a more resilient portfolio. We initiate on INDUSTOW with an Accumulate rating and a TP of INR 491 based on 15x FY28E EPS of INR 33
5G-led network densification to drive long-term tower infra growth:
India’s rapid 5G rollout and rising data consumption are driving the next phase of telecom network densification, particularly across urban and industrial clusters. While a mere ~31% of wireless data subscribers currently use 5G services, 5G users are likely to exceed 970mn by CY30, creating sustained demand for tower infrastructure (Source: TRAI & Ericsson). We believe INDUSTOW is well positioned to benefit via higher equipment loading, tenancy growth, rooftop sites, small cells, and IBS deployments. Although incremental tower additions are likely to remain in the low single digits, due to a mature coverage landscape, densification-led investments would continue to drive revenue growth. Rising indoor coverage requirements across malls, metros, hospitals, and commercial hubs further expand the long-term opportunity for small cell and in-building solutions.
Vodafone Idea revival and capex expansion to support tenancy growth:
IDEA’s network expansion and rising capex are likely to drive incremental tenancy growth for INDUSTOW. Vi’s 5G rollout and planned tower expansion is translating into higher colocation demand for INDUSTOW. Improved financial stability, supported by Adjusted gross revenue (AGR) relief and government equity conversion, has significantly reduced receivables risk. Further, capital infusion plans are set to strengthen Vi’s balance sheet and accelerate network expansion, indirectly benefitting INDUSTOW through sustained tenancy additions and revenue growth.
Initiate with Accumulate and a TP of INR 491:
India’s tower infra industry and INDUSTOW in particular are poised for long-term growth, driven by accelerating 5G adoption and expectations of early adoption of 6G technology. This would drive multi-year network densification to support structural uplift in data consumption. We expect a top-line CAGR of 6%, an EBITDA CAGR of 6% and a PAT CAGR of 10% during FY26-28E. We initiate coverage of INDUSTOW with an Accumulate rating and a target price of INR 491 based on 15x FY28E EPS of INR 33.
Please refer disclaimer at Report
SEBI Registration number is INH000000933
