Is Indus Towers’ recovery firm?

Recoveries lift fortunes

- Ananya Roy [e-mail]

Shares of Indus Towers Ltd, Bharti Airtel Ltd's telecom infrastructure subsidiary, have put up a good showing lately, gaining close to 30% from their 52-week low of ₹312.55 on 3 September. Indus has been recovering long-pending dues from Vodafone Idea Ltd. Cheering these developments, credit rating agency Icra upgraded its long-term rating to ‘AAA’ on 27 November, soon after Emkay Global Financial Services raised its target price for the stock from ₹410 to ₹460.

With the stock back to flirting with its critical resistance level of ₹400, focus has turned towards the fundamental factors driving momentum. Vodafone Idea’s potentially improving prospects bode well for Indus. But capex-driven strain on cash flows along with a falling tenancy ratio and persistently negative energy margins pose hurdles, while Indus’ entry into Africa has pros and cons.