Nomura has initiated coverage on Indus Towers with a ‘Buy’ rating. It has set a target price of Rs 490, implying an upside of 22% from the current market price. The company’s positive outlook is the primary driver for this recommendation.
Also, the brokerage house expects that the valuation gap between global peers and Indus Towers will narrow as the company’s stabilisation unlocks tenancy growth.
Structural data growth and 5G transition
Increasing data consumption and the shift to 5G are major growth drivers as they lead to higher equipment loading on existing towers. This increased loading generates additional rental income for Indus Towers with minimal associated costs.
Stabilisation of Vodafone Idea (Vi)
As one of Indus Towers’ anchor tenants, Vodafone Idea’s improved financial health and upcoming capital raise are critical. Nomura expects the tower company to capture 70% of Vi’s incremental network rollout, which will directly boost core revenue and EBITDA.
“This should more than offset the potential loss of some tenancies from Reliance Jio (unlisted) over FY27-28, in our view,” said Nomura.
Anticipated dividend resumption
Improved cash flows resulting from Vi clearing its past dues have created a cash surplus. Nomura views the likely bringing back of dividends in Q4FY26 as a significant trigger for a stock re-rating.
“We estimate a total dividend payout of Rs 19 per equity share by Indus Towers in FY26, implying a dividend yield of 4.7% at current price levels. We think that a dividend dilemma has kept valuations suppressed for Indus Towers,” said Nomura.
Attractive valuation relative to peers
Indus Towers currently trades at a fraction of the Enterprise Value to EBITDA multiples seen by global giants like American Tower and domestic operators like Bharti Airtel. Nomura believes this valuation gap will narrow as tenant risks subside.
Strong operating leverage
The tower business is characterised by high fixed costs, meaning that incremental tenancy additions translate into high-margin revenue growth. Higher tenancy density significantly improves revenue per tower and strengthens return ratios.
Indus Towers share price performance
The share price of Indus Towers has risen 1.7% in the last five trading sessions. The stock has declined 3% in the past one month and has surged over 7% in the last six months. Indus Towers’ share price has given a return of more than 8% over the previous one year.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.