Motilal Oswal Sets Price Target of Rs 430 for Indus Towers

Indus Towers' Financial Performance Disappoints in 4QFY26

Indus Towers' (Indus) fourth quarter fiscal year 2026 (4QFY26) results have fallen short of the research team's estimates. The company's recurring earnings before interest, taxes, depreciation, and amortization (excl. provisions), which is a key metric for evaluating a company's financial performance, declined by 1% quarter-over-quarter (QoQ) to INR44.3 billion.

Operationally, Indus has shown some improvement, with tower additions increasing QoQ and tenancy additions remaining steady. The management has also indicated that the company's orderbook remains robust, which is a positive sign. However, the company's capital expenditures (capex) have increased by 18% QoQ, in line with the tower additions. This increase in capex has been a result of the company's efforts to expand its tower network.

The company's financial performance has also been impacted by the lower receivables in the quarter. Despite this, Indus has managed to improve its free cash flow (FCF) to INR11 billion in 4Q (compared to approximately INR8 billion in 3Q).

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Outlook and Rating

The research team has reiterate its Neutral rating for Indus Towers, with a revised discounted cash flow (DCF)-based target price of INR430 (previously INR440). This revised target price is based on a DCF-based 6.6x fiscal year 2028 estimated pre-IND AS enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple.

However, the team has highlighted that RJio's tenancy risks may cloud the potential benefits from Vi's planned capex, which could impact the company's financial performance in the future.