CLSA Reiterates 'Outperform' Rating on Indus Towers, Sees 32% Upside

CLSA, a leading global investment firm, has maintained its high-conviction 'Outperform' rating on Indus Towers, citing the company's robust growth outlook driven by rising tenancies led by network expansion from Bharti Airtel and Vodafone Idea. The brokerage has set a target price of Rs 580 per share, implying an upside of nearly 32 percent on the telecom tower company's stock from its yesterday's closing price.

The growth outlook for Indus Towers is supported by the addition of twin tenants by Airtel and Vodafone Idea, which has increased towers by a combined 20,000 in FY26. Total tenancies are estimated to have risen by 30,000-40,000 during the year, with CLSA expecting the tenancy growth momentum to continue over the next few years, driving earnings growth for the company.

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CLSA estimates that Indus Towers could add around 36,000 towers and 77,000 tenancies cumulatively between FY26 and FY29. However, if the company retains or expands its market share, tenancy additions could be even higher at 1.01 lakh-1.23 lakh over the period.

The brokerage believes that such growth would provide upside to its current forecast of a 10 percent EBITDA compound annual growth rate through FY29, potentially increasing it to 11-12 percent. CLSA also highlighted the stability of Indus Towers' business model, with about 90 percent of its EBITDA derived from long-term contracts for existing tenancies that carry annual escalation clauses.

The company's strong free cash flow generation should support continued dividend payouts, while dividend yield also has room for improvement, according to CLSA. The brokerage further noted that Indus Towers stock's valuation remains attractive at around six times EV/EBITDA despite the expected growth in tower and tenancy additions.

Indus Towers reported a consolidated net profit of Rs 1,793 crore for the fiscal fourth quarter, broadly unchanged from Rs 1,779 crore in the year-ago period. Revenue rose 5 percent year-on-year to Rs 8,101 crore, while EBITDA increased 1.6 percent to Rs 4,464 crore.

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For the full year FY26, the company reported consolidated revenue of Rs 32,493 crore, up 7.9 percent from the previous year. The board has recommended a final dividend of Rs 14 per share for FY26, subject to shareholder approval at the annual general meeting.

The stock ended Monday's session at Rs 439.9, giving the company a market capitalisation of about Rs 1.16 lakh crore. Indus Towers shares have gained 15.6 percent over the past year, compared with a 3.9 percent decline in the Nifty 50 index during the same period.