Indus Towers buyback: Board meet on July 30; stock up 125% thus far in 2024

Indus Towers buyback plan: Share price hits over six-year high of Rs 447.30, gaining 5% on the BSE on July 26

Indus Towers share price hit an over six-year high of Rs 447.30 on the BSE on Friday, July 26. Indus Towers stock gained 5 per cent on the BSE in Friday’s intraday trade after the company announced that its board will meet on July 30, 2024, to review a proposal for the buyback of equity shares of the company.

Thus far in the calendar year 2024 (CY24), Indus Towers, a telecom infrastructure company, has zoomed 125 per cent. In comparison, the BSE Sensex was up 11 per cent. The stock is trading at its highest level since November 2017. It had touched a record high of Rs 505 on May 29, 2015.

Earlier, on July 10, Indus Towers announced that a meeting of the board of directors of the company is scheduled to be held on Tuesday, July 30, 2024 to, inert-alia, consider and approve the audited financial results for the first quarter (Q1) ended on June 30, 2024.

"The board of directors will also consider and approve the proposal for buyback of fully paid-up equity shares of Rs 10 each of the company, including matters related/ incidental thereto," Indus Towers said after market hours on Thursday.

Indus Towers is India’s leading provider of passive telecom infrastructure and it deploys, owns and manages telecom towers and communication structures, for various mobile operators. The company’s portfolio of about 220,000 telecom towers makes it one of the largest tower infrastructure providers in the country with presence in all 22 telecom circles. Indus Towers caters to all wireless telecommunication service providers in India.

On 19 June 2024, the Vodafone Promoter Mauritius shareholders had collectively sold 484.68 million equity shares comprising 17.98 per cent of the equity share capital of Indus Towers. Vodafone intends to use the proceeds from the stake sale to settle its dues to Indus Towers.

Meanwhile, Indus Towers anticipates capex to be higher again in FY25 considering strong tower rollout by Bharti, and the company continues to gain share in Bharti’s rollout; and likely expansion for Vodafone Idea (VIL). However, Indus Towers anticipates overdue recovery from VIL where it has created provision.

Vodafone Plc has around 3 per cent holding in Indus which indeed has been pledged to Indus. Monetisation of Indus stake held by Vodafone Plc can aid partial recovery of overdue. Indus has stated dividend policy that any FCF generated by company will be used to pay the dividend, and VIL overdue recovery should boost FCF in FY25, analysts at ICICI Securities said in a company update.

Indus remains excited about growth in the tower industry driven by rural expansion by Bharti, and 4G rollout from VIL. It expects a fair share in VIL’s expansion, despite the risk of higher competitive intensity. Indus sees an advantage from its strong tall tower portfolio, good footprint in past VIL radio frequency planning, strong execution track record, and reward for support during challenging times. Nonetheless, it remains cautious on competition, the brokerage firm said.

The company believes it has the core strength in managing space and power; and the data center fits well into their ecosystem. However, it has not had a discussion with Bharti on the merger of Nxtra, it added.