Indus Towers, India's leading tower company, could post 8% compound annual growth rate in operating income through FY24-27 if key customer Vodafone Idea (Vi) closes its much-awaited ₹45,000 crore fundraise on schedule and invests in network expansion, analysts said.
Cash-strapped Vi said it will open a sale of new shares on April 18 and close on April 22 to raise up to ₹18,000 crore. This will be closely followed by a ₹25,000-crore fundraising via debt. The company has already approved raising ₹2,075 crore from a promoter entity through a preferential share issue.
"...we are enthused by progress on the (Vi) fund raise and believe this should drive further upside for Indus Towers," Citi Research said in a recent report.
Analysts added that if Vi uses the fresh capital to add around 75,000 sites to cover network gaps in its priority markets to compete effectively with bigger and financially-stronger rivals Reliance Jio and Bharti Airtel, it could lead to 40,000-45,000 tenancy additions for Indus.
«If Vi expands its network, Indus's growth outlook will improve. Assuming all the (new) tenancies are set up on its existing towers by FY26, then Indus would deliver a tower/tenancy CAGR of 6%/7% over FY24-27 and FCF (free cash flow) generation of ₹20 per share in FY26 with a marginally better 3% CAGR in FCF over FY27-34,» Jefferies said in a research note.
Vi's two-part fundraising plan through a mix of equity and debt is aimed at repaying dues to key vendors such as Indus, bolstering 4G operations and starting 5G