Brokerage firm Motilal Oswal has maintained a neutral rating on Indus Towers with a target price of Rs 410. While tenancy additions rose sharply due to network rollouts by Vodafone Idea, the brokerage flagged shifting capital expenditure patterns. Investors are watching how the company balances infrastructure spending with free cash flow generation.
Brokerage firm Motilal Oswal has maintained a neutral rating on Indus Towers, setting a target price of Rs 410 per share. This update follows the company’s second-quarter financial results for the 2027 fiscal year, where performance aligned with general market expectations. The company reported a 2% quarter-on-quarter rise in recurring operating profit, or EBITDA, reaching INR 4.75 billion.
A key operational highlight for the quarter was the significant jump in tenancy additions, which reached 7,900 units, up from approximately 4,200 in the previous quarter. Analysts attribute this acceleration mainly to the rapid network rollout activities by Vodafone Idea. While tenancy numbers grew, the rate of adding new physical towers moderated during the same period.
The brokerage highlighted a distinct difference in capital spending patterns that investors should note. While the company’s reported capital expenditure surged by 40% quarter-on-quarter to INR 24 billion, the actual cash spent on expansion, known as cash capital expenditure, dropped by 9% year-on-year to INR 16.3 billion. Distinguishing between reported spending and actual cash outflow helps clarify the true impact on the company’s financial position and available cash.
Indus Towers’ ability to generate cash remains a cornerstone of its financial health. The company generated INR 13.8 billion in free cash flow during the quarter, bringing the total cash generated in the first half of the 2027 fiscal year to INR 28.1 billion. This level of cash flow provides a stable foundation, despite the volatility often seen in quarterly infrastructure deployment.
For investors, the business remains closely tied to the capital spending plans of India's major telecom players. Any slowdown in network expansion by key customers like Vodafone Idea, Bharti Airtel, or Reliance Jio can directly impact future tenancy growth. Additionally, the company's financial health remains dependent on timely payments from these partners, a risk factor that shareholders consistently monitor. The next important updates to track will be the sustainability of cash flow and whether the current pace of tenancy additions continues in the coming quarters.