Kotak upgraded Indus Towers to ‘Buy’ from its earlier ‘Sell’ rating and raised the stock’s price target by nearly 10% to ₹400, up from ₹365 previously.
The new target implies a potential upside of 15% from the stock’s closing price on Tuesday.
Kotak believes that concerns surrounding uncertainty in payouts and capital allocation related to Indus Towers’ African foray are overdone.
The brokerage expects a gradual uptrend in the tenancy ratio, which should drive 8% EBITDA CAGR and 10.5% EPS CAGR over FY2025-28E.
In Kotak’s base case of a 3+1 market structure, with Vodafone Idea (Vi) gradually rolling out its network, Indus is expected to resume dividends in FY2026E, with a 90% payout ratio, translating into a 7% yield.
Investments in Africa, it said, are likely to be gradual and measured, leveraging Bharti Airtel’s leadership in select markets.
Indus Towers stock is currently trading at an attractive valuation of 6.4x EV/EBITDA and is expected to offer a strong 7.1% free cash flow (FCF) yield in FY2027E.
Meanwhile, Ambit in its recent note, said that risks surrounding Indus Towers are overblown, calling it its top telecom pick, with a target price of ₹525.
Earlier, Citi had maintained its ‘Buy’ rating with a target of ₹460, while CLSA trimmed its target to ₹520 but continued to maintain a positive stance.
Indus Towers shares are now trading 1.14% higher at ₹350.85 on Wednesday.
