Nomura maintains a positive view on Indus Towers, suggesting recent market fears regarding Jio tenancy renewals are likely overstated. The brokerage notes that the practical and financial hurdles for telecom operators to shift massive tower infrastructure provide stability. With Bharti Airtel increasing its promoter stake, investors are tracking potential improvements in the company’s dividend yield and debt reduction over the coming years.
Nomura has reaffirmed its positive outlook on Indus Towers, highlighting that recent concerns over potential tenancy exits by Jio Platforms may have been exaggerated. Despite a recent decline in the company’s share price, which reflected investor anxiety over contract renewals, the brokerage suggests that the technical and economic barriers for a large-scale tenant shift remain high. Relocating equipment across a vast network of thousands of towers involves significant logistical challenges and high capital spending, making a mass transition for any major operator difficult.
Impact of Potential Tenancy Changes
Analyses from Nomura indicate that even in a hypothetical scenario where all tenancies related to Jio were terminated, the financial impact on the company’s earnings before interest, taxes, depreciation, and amortization, or EBITDA, would be limited to approximately 9.2% for the 2028 financial year. A more likely scenario, which assumes a 20% discount on renewed contracts, would result in a smaller impact of about 7.8% on EBITDA. Currently, the company is trading at roughly 6.1 times its projected 2028 EBITDA, which sits at a 10% discount compared to its historical valuation average.
Promoter Backing and Financial Health
Bharti Airtel, as a key promoter, has been actively increasing its interest in the company. As of March 2026, Bharti Airtel held a 51.26% stake in Indus Towers, transitioning from its historical role as a joint venture partner to a majority owner. The company has received board approval to acquire an additional 4.8% stake, with further buying expected following the conclusion of the insider trading blackout period in late July 2026. This promoter commitment is viewed as a source of stability for the infrastructure provider.
Long-Term Financial Targets
Indus Towers is working toward a path of steady deleveraging. Projections indicate that the company’s net debt-to-EBITDA ratio could decrease from 1.19x in the 2026 financial year to 0.80x by 2029. This improvement in the balance sheet is expected to support consistent dividend payouts, with forecasts suggesting a dividend yield of 6.3% for 2028, potentially reaching 6.9% by 2029.
Investors are also tracking the progress of Vodafone Idea (Vi), a significant client whose financial stability remains a factor for the company. Historically, concerns over receivables from Vi have caused Indus Towers to trade at a valuation discount compared to global infrastructure peers like American Tower and SBA Communications. As Vi’s financial situation stabilizes, there is potential for this valuation gap to narrow. The next key monitorables for the company include the actual renewal terms for existing tower tenancies, the progress of promoter share purchases after the blackout period, and continued improvements in receivables collection from its telecom partners.