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CLSA gives ‘buy’ rating for Indus Towers. Here’s why

Brokerage firm CLSA has given Indus Towers a ‘buy’ rating saying that the mobile tower company has added the highest number of towers last year, and has an upside potential to grow in valuation.

The CLSA report notes that the company’s anchor tenants reported data traffic growth of 46 percent year-on-year in the 9 months of fiscal year 2021.

CLSA also mentions that in the “3QFY21 Indus had the highest-ever towers added” to carry the total 175,510. Indus is among the largest mobile tower companies globally, but its EV/EBITDA discount to peers is wide at 66 percent.

The firm forecast Indus’ EBIDTA growth at 5 percent. It, however, says if current momentum continues, its FY23 growth at 10 percent besides 5 percent yield will be highest among peers.

“Potential for stake sale by telcos could also reduce the discount,” the report said.

Indus Towers had posted a profit of Rs 1,360 crore for the third quarter ended December 2020.

Indus Towers merged with Bharti Infratel Limited in November last year. Bharti Airtel’s stake in the firm after the merger is around 36.7 percent from its earlier 53.5 percent. Vodafone holds a 28 percent stake in Indus Towers after selling its 11 percent stake. Vodafone Idea had received Rs 3,760.1 crore cash for its 11.15 percent holding in Indus. CNBC TV18

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