Indus Towers soars 15%, nears 52-week high on telecom relief package

Shares of Indus Tower rallied 15 per cent to Rs 279.35 on the BSE in intra-day trade on Thursday after the Union Cabinet on Wednesday approved a relief package for the telecom sector (telcos) that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign direct investment through the automatic route. The stock is trading close to its 52-week high of Rs 282 touched on 24 February, 2021.

However, in the past six months, the stock has under-performed the market by gaining mere 4 per cent, amid growth concerns as Vodafone Idea, one of its larger client, and the tower-sharing business has a limited business case for single-tenancy operations. In comparison, the S&P BSE Sensex has rallied 17 per cent during the same period.

Indus Towers Limited (formerly Bharti Infratel Limited) is India’s leading provider of passive telecom infrastructure and it deploys, owns and manages telecom towers and communication structures, for various mobile operators. It caters to all wireless telecommunication service providers in India. Together, Bharti Airtel and Vodafone Group are classified as promoters of the Indus Tower and they own 69.85 per cent shares of the company, as on 30 June, 2021.

On the future outlook, N Kumar, chairman of Indus Tower in the financial year 2020-21 (FY21) annual report said that our outlook for the sector remains positive, riding on a huge upsurge in data demand and the need for a better-connected nation in the post pandemic world. “The introduction of new technologies will further intensify the role of passive infrastructure players like us. Indus Towers, with its nationwide presence and several industry best benchmarks stands in good stead to invest and capitalize on these opportunities.”.

The long-term network upgrade opportunity in the Telecom sector towards 5G, fiberization, small cells, and indoor coverage would continue to drive growth in the Telecom Passive Infrastructure industry. Recovery in tenancy adds and a reduction in exits have also brought about stability in earnings, Motilal Oswal Securities said in June quarter results update.

However, FY23E onwards, the exit penalty receipts from Vodafone Idea would reduce. Furthermore, its situation remains precarious, weighed by ballooning debt and its inability to raise funds and improve its liquidity. This remains the biggest overhang for Indus Towers as Vodafone Idea remains a large client and the Tower-sharing business has a limited business case for single-tenancy operations. On the other hand, the threat from RJio’s increased focus in the Tower Infrastructure space may weaken Indus’ positioning, the brokerage firm had said.

At 12:35 pm; Indus Tower was trading 12.5 per cent higher at Rs 272.40 on the BSE, as compared to 0.46 per cent rise in the S&P BSE Sensex. The trading volume at the counter more-than-doubled with a combined 34.1 million equity shares changing hands on the NSE and BSE.