Indus Towers Share Soars Nearly 7% Today (29 December, 2023)

Ajit Kushwaha

Indus Towers, India’s largest telecom tower company, saw its shares surge nearly 7% on Friday after reporting strong quarterly results despite higher costs related to the rollout of 5G services. The stock was trading at ₹199, marking a new 52-week high.

Indus Towers Posts Double Digit Profit Growth in Q3

Indus Towers reported a net profit of ₹1,295 crore in the September quarter, a rise of 4% year-on-year. This is a remarkable feat considering the company bore additional costs during the quarter due to the rollout of 5G services by Reliance Jio, Bharti Airtel and Vodafone Idea.

The company was able to cushion the impact of 5G rollout costs due to higher tenancies and energy savings. Consolidated revenue for the quarter rose 1% to ₹7,133 crore compared to the same period last year.

Margin Pressure Eases on Energy Savings

Despite the 5G rollout costs, Indus Towers’ quarterly profit beat market estimates. This was achieved due to a 60 basis point year-on-year expansion in margins to 26.6% as energy costs fell. Savings on energy costs provided a big boost to the company’s bottomline.

The reduction in diesel consumption led to a 5.4% year-on-year decline in power and fuel costs. This helped negate the impact of higher rents and security service charges related to the 5G rollout.

Tenancy Additions Remain Strong

Indus Towers saw continued momentum in tenancy additions, hinting at strong demand for telecom tower infrastructure. The company added a net 6,029 tenancies in Q3, taking the total count to 193,124.

The growth in tenancies was driven by the rapid 5G rollout across India. As telecom operators expand their 5G coverage, demand for towers is expected to remain strong.

Key Takeaways

  • Indus Towers Q3 profit beats estimates, grows 4% YoY despite 5G rollout costs
  • Revenue rises 1% YoY to ₹7,133 crore
  • Margin expands 60 bps YoY to 26.6% on energy savings
  • Tenancy additions remain strong at 6,029 in Q2
  • 5G deployments by Airtel and Jio gathering pace
  • Long-term demand outlook robust on rising data usage

The quarterly performance highlights Indus Towers’ ability to mitigate cost pressures through operational efficiencies.

With 5G coverage expanding rapidly, the company remains well positioned to capitalize on the growth opportunities. This explains the strong positive market reaction to the latest earnings release.

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By Ajit Kushwaha Writer
Ajit Kushwaha is a stock market investor and business owner of a chips manufacturing company in Hazaribagh, Jharkhand. He holds a Bsc. from Vinobha Bhave University and leverages over 5 years of share market experience in managing investments and his snack food business.
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