Jefferies downgrades Indus Towers to 'Underperform'; sees 14% downside

Jefferies has downgraded Indus Towers shares to 'Underperform', cutting target price to ₹375. The global brokerage stated renewal risks, rising capex, and pressure on earnings and valuations as risks

Jefferies downgrades Indus Towers stock  

Global brokerage Jefferies has downgraded Indus Towers stock to 'Underperform', cutting its share price target to ₹375, as it flags emerging risks to growth, cash flows and valuations.  

The downgrade from a 'Buy' rating reflects near-term uncertainties and mounting structural pressures on Indus Towers that could limit upside in the stock despite a steady operating backdrop, the brokerage said. 

The risk-reward for Indus Towers, Jefferies believes, has turned less favourable, with modest earnings growth and yield unlikely to offset rising risks.  

"We cut our revenue/PAT estimates by 2-6 per cent post which the stock offers 3 per cent EPS growth and 4 per cent yield. Risks on growth outlook should weigh on re-rating potential too," the brokerage said in a recent note. 

 

On the bourses, Indus Towers' share price declined 3.5 per cent in the intraday trade on the BSE, hitting a low of ₹423 per share on the stock exchange. The stock was lower by 2.7 per cent at 11:50 AM as against a 1.5 per cent rise in the benchmark BSE Sensex index.   READ STOCK MARKET UPDATES TODAY LIVE 

The stock traded with heavy volumes today as 0.946 million shares had changed hands on the counter till the time of writing this report, compared to a two-week average volume of 0.05 million shares.  

Indus Towers shares hit a 52-week high of ₹481.5 on February 19, 2026, and a 52-week low of ₹312.6 on September 3, 2025.

Jefferies on Indus Towers Shares

Jefferies has downgraded the rating of Indus Towers to 'Underperform' from 'Buy' and cut the target price to ₹375 from ₹530. The new base case target price implies a 14-per cent downside in the stock. 

Analysts at Jefferies value Indus Towers at ₹510 (16 per cent upside) in their bull case scenario, while they value the stock at ₹330 (25 per cent downside) in their bear case scenario.

Key reasons why Jefferies downgraded Indus Towers share price:

Rising site renewal risks

The first key concern is the bunching up of tower lease renewals over FY27, which could impact both revenues and growth visibility. A significant portion of Indus Towers' sites are coming up for renewal over H2CY26 and H1CY27, increasing the risk of renegotiation pressure. 

"Moderation in incremental site additions at an industry level is likely to increase competition for any large renewals which in turn may require Indus to either offer a higher discount during renewals or run the risk of the tenant shifting to other tower cos," it said. 

Further, the brokerage cautioned that if Indus Towers offers an additional discount to any one of the operators, it may have to offer the same discounts to other telecom operators (either Vodafone Idea or Bharti Airtel). This could result in revenue loss on its entire tenancy base, it noted.  

"On the other hand, a lower discount offering will likely lead to some tenancies not being renewed, however overall revenue loss may be lower," Jefferies said. 

Factoring in this risk, Jefferies expects no additional discount and expects 25 per cent of Indus Towers' sites not being renewed It, thus, has cut its revenue and Ebitda estimates by 2-2.5 per cent for FY27-28.  READ | ICICI Prudential Life shares gain 7% on posting Q4; brokerages stay bullish

Elevated capex levels

Jefferies highlighted the sharp rise in capital expenditure as another key concern, which is expected to remain elevated and weigh on earnings and free cash flow in the near-term. 

Despite a slowdown (30 per cent reduction) in tower additions, Indus Towers has seen a surge in capex during 9MFY26, driven largely by maintenance requirements and ongoing investments.  

"Indus Towers' capex has increased by 38 per cent Y-o-Y during the period, driven by a 94 per cent Y-o-Y increase in maintenance capex. This is unlikely to moderate in our view," Jefferies said. 

In addition, growth-related investments in solar deployments and lithium-ion batteries are also keeping capex high.  

"While these initiatives may reduce operating costs over time, they will continue to pressure near-term cash flows. We expect capex to remain in the ₹72,000–80,000 crore range over FY26-29 and has raise our FY27-28 capex estimates by 18 per cent," it said.

Pressure on payouts and valuations

Overall, the combined impact of renewal risks and higher capex is expected to weigh on profitability, cash generation and stock returns. 

Jefferies said that higher capex will lead to increased depreciation costs, forcing them to cut profit estimates sharply.  

"While we cut revenues/Ebitda estimates by 2-2.5 per cent, we cut our profit estimates by 6 per cent," it said. 

Jefferies has also trimmed free cash flows (FCF) estimates by 22-26 per cent for FY27-28, on the back of higher capex. This, in turn, drove the brokerage to cut their dividend expectations by 15-30 per cent. 

"Over FY26-29, we expect Indus Towers to deliver 4 per cent/3 per cent CAGR in revenues/EPS and offer 4 per cent yield over FY27-28. Risk of higher than expected discontinuation around renewals could weigh on valuations. We cut our target multiple to 6.5x EV/Ebitda to factor this," it said.