The stock has underperformed the BSE 100 over the past six months, falling 14 per cent, while the broader index has remained flat over this period. Given the price correction and expectations of a capital expenditure (capex) pickup by Vodafone Idea (Vi), some brokerages have upgraded the stock. At the current price of ₹376, the telecom infrastructure major is trading at 10x its 2027-28 earnings estimates.
A pickup in network rollout and higher capex by Vi are key triggers for the stock. Vi has arrested subscriber losses and improved average revenue per user (Arpu) and churn, with the focus now shifting to capex deployment and a debt fundraise. The telecom regulator’s August subscriber data shows that Vi has improved its subscriber mix, with healthy overall net adds. Vi has now posted two consecutive months of visitor location register net adds (registered and active mobile subscribers), indicating a degree of subscriber stabilisation.
Analysts led by Sumangal Nevatia of Kotak Research expect a favourable market construct for the industry, with improving Arpu and moderate capex intensity for the top two players aiding strong earnings/free cash flow (FCF) growth. The anticipated debt raise for Vi, following adjusted gross revenue relief and equity infusion, should help it stabilise operations. They expect a 3+1-player market to continue, with Vi’s capex spending contingent on a debt raise. The brokerage has a ‘buy’ rating on Indus, with a target price of ₹480.
Some of the gains are expected to come through in the second quarter (July-September/Q2) of 2026-27 (FY27). JM Financial Research expects Indus’ operating profit to grow 1.6 per cent sequentially on healthy tower and tenancy additions, driven by Bharti Airtel’s continued rural expansion and Vi rollouts. The gains would be aided by the sequential easing of tower supply-chain disruptions caused by constrained gas supplies from West Asia for tower fabrication in Q2FY27.
UBS Research expects Indus to report improving tenancy growth quarter-on-quarter (Q-o-Q), as Vi’s recent fundraise should result in accelerated capex by the entity. The brokerage expects tenancy additions of 6,000 in Q2, against 4,200 in the first quarter (April-June/Q1) of FY27, with tenancy revenue growth of 1.2 per cent sequentially and operating profit growth of 2.4 per cent Q-o-Q.
The Africa market expansion is another trigger for Indus. The company indicated that it is on track to enter the African market in the second half (H2) of FY27 and has received approvals to roll out its network in the Zambian, Ugandan, and Nigerian markets. While the company has received orders from Airtel Africa, which is its anchor tenant, it is eyeing other non-anchor customers for its future rollouts.
African operations for Indus, according to analysts led by Navin Killla of UBS Research, have kick-started, although the impact will likely be minimal for the next few quarters, given the single tenancy. However, dividends should grow from FY27 onwards, as the dividend policy is linked to India FCF and Africa capex, which is expected to be funded by debt. The brokerage has upgraded the stock to ‘neutral’ from ‘sell’, with a target price of ₹400.
In addition to overall growth, the Street will track energy margins, which deteriorated to -4.6 per cent in Q1FY27 on account of seasonal factors. These are expected to trend lower in H2FY27. What should help keep costs in check are higher lithium-ion battery deployment, as its portfolio goes through the replacement cycle for lead-acid batteries, and a higher number of solarised sites. This should gradually improve energy margins and reduce maintenance-related site capex after two to three years.
 "Indus Towers (Photo: Telecompaper)")