Indus Towers is in focus. Nomura is maintaining a bullish outlook on the company’s fundamental value and strategic position despite concerns with regards to tenancy renewals from Jio Platforms. The brokerage house also maintained its 12-month price target at Rs 505. 

Here is a detailed analysis of the investment rationale driving Nomura’s recommendation. 

Assessment of Jio’s tenancy renewal risk

Nomura addressed the market nervousness around the renewal of large tenancies from Jio Platforms, which were signed almost a decade ago. Despite an 11% correction in share price due to these concerns, the analysts’ base case assumes no major shake-up in Jio’s tenancies. 

This view is supported by three main factors: the unfavourable economics for a telecom operator to move to a single-tenant tower in high-density urban areas, the negotiation leverage held by Indus Towers’ promoter (Bharti Airtel) through its own relationship with Altius, and the immense physical difficulty of moving equipment from 50,000 towers. 

Relocating and reconnecting such a massive network to fibre is described as tedious and economically unviable, especially considering it takes roughly two months just to build and connect a single new site.

Valuation resiliency and market overreaction

Further, Nomura said that the recent sharp correction in the stock price is exaggerated and that the current valuation offers significant upside. The brokerage analysis suggests that even in a highly unlikely “worst-case” scenario where Indus Towers loses every single Jio tenancy, the impact on FY28 EBITDA would be limited to a 9.2% decline, and the target price would only decrease by approximately Rs 50 per share. 

If tenancies are simply renewed at a 20% discount, the impact is even smaller at 7.8% of EBITDA. The stock is currently trading at an undemanding valuation of 6.1x FY28 EBITDA, which represents a 10% discount to its historical average.

Strategic support from Bharti Airtel

A critical factor providing support for the stock is the increasing stake and commitment from its promoter, Bharti Airtel. The telecom operator has already received board approval to increase its stake by an additional 4.8%, and Nomura expects buying to resume once the insider trading blackout period ends in late July 2026. 

The report highlighted Bharti Airtel’s journey from a 42% joint venture partner to a majority owner with a 51.26% stake as of March 2026. This strong promoter backing is essential because it aligns the interests of India’s leading telecom operator with the health of the tower infrastructure provider. Bharti Airtel’s dominance in the market ensures that Indus Towers has a stable anchor tenant, which mitigates long-term risks for other investors.

Catalysts for re-rating and peer comparison

Beyond the Jio scenario, the report said that progress regarding Vodafone Idea’s debt raise and improving stability will be key catalysts for a stock re-rating. Historically, Indus Towers has traded at a significant discount to global peers like American Tower and SBA Communications primarily due to risks associated with Vi’s receivables. 

However, as Vi’s stability improves, Nomura expects this gap to close, justifying their target multiple of 7.5x FY28 EBITDA, a slight premium to the historical average. The analysts believe that a stable Vi could lead to a reinstatement of consistent dividends, which would further enhance investor confidence and the stock’s overall valuation.

Strong financial health and dividend outlook

Nomura projects a robust financial future for Indus Towers, characterised by progressive dividend increases and steady deleveraging. The brokerage estimates a dividend yield of 6.3% for FY28 at the current price, which could rise to 6.9% by FY29.

Going forward, the company’s leverage is expected to improve significantly, with the net debt to EBITDA ratio projected to fall from 1.19x in FY26 to 0.80x by FY29. This financial strength is built on the company’s nationwide portfolio of over 2,59,622 towers, which provides high operating leverage. As new tenancies are added to existing sites, the incremental revenue flows through at high margins, supporting an expected 9.3% EPS growth by FY28.

Indus Towers share price performance

The share price of Indus Towers has risen 3.3% in the last five trading sessions. The stock has declined 5% in the past 1 month and 8% in the last 6 months. Indus Towers’ stock price has dropped 1.5% over the previous 12 months.