Indus Towers: Voda Idea relief positive; 5G rollouts, solid tenancy outlook to lead growth

Domestic brokerage firms continue to remain largely positive on Indus Tower Ltd, a leading provider of passive telecom infrastructure. They are swearing by its strategic positioning and growth prospects. It operates over 2,56,000 towers and 4,15,000 co-locations across all 28 telecom circles in India, maintaining the broadest coverage in the country.

HDFC Securities points to Indus Towers' long-term contracts, including master service agreements (MSA), with major customers such as Bharti Airtel Ltd and Bharti Hexacom Ltd as a key strength for stable revenues and market presence. Tenancy growth remains solid, with the net tenancy addition reported at 4,505, supported by gross additions of 4,800 and impacted by 295 exits.

Tower addition stood at 4,301, reflecting a reduction in rollout intensity from Vodafone Idea Ltd (VIL). The tenancy sharing ratio was stable quarter-on-quarter at 1.63x. HDFC Securities expects a robust tower rollout over the coming 4-6 quarters, citing strong order-book visibility and the company's ability to accommodate a second tenant per tower.

In terms of expansion, Indus Towers is set to begin operations in African countries, partnering with Bharti Airtel, which holds substantial market share in the region. HDFC Securities notes that "Indus Towers’ planned expansion into Africa appears strategically sound, leveraging the strong growth potential of under-penetrated telecom markets, which contrasts with India’s mature landscape."

HDFC Securities views the wider tower infrastructure sector as positive, fuelled by global 5G expansion, increasing data consumption, and government-led digital initiatives. Sector trends identified include network densification with more towers and small cells, adoption of sustainable energy sources like solar power, AI-driven predictive maintenance, and extending services beyond traditional telecom into fibre, data centres, and IoT infrastructure.

Shares of Vodafone Idea rose more than a per cent to Rs 440.95 on Monday, with a total market capitalization of Rs 1.15 lakh crore. The stock had hits 52-week high at Rs 455 on Friday itself. The stock has jumped more than 40 per cent from its 52-week low at Rs 312.60, hit in March 2025.

The brokerage anticipates strong revenue growth for Indus Towers from 5G rollouts and higher tenancy ratios, as well as opportunities arising from 4G and emerging technologies including artificial intelligence, robotics, and the internet of things. HDFC Securities considers the company's planned international foray, resilient financial structure, and major customer relationships as factors placing it favourably for further expansion.

HDFC Securities suggested that investors can 'buy' in the Rs 430-440 band and add on dips in the Rs 393-401 band. We believe the base case fair value of the stock is Rs 470 and the bull case fair value of the stock is Rs 501 over the next 2-3 quarters.

On the other hand, Motilal Oswal Financial Services said that recent relief measures for Vodafone are sentimentally positive for Indus and should enhance visibility on Vi’s tenancy additions and enable reinstatement of dividends, while commenting on Indus Towers. "We believe risk-reward is not attractive and reiterate 'neutral' on Indus with an unchanged target price Rs 400," it said.