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  • 06 May 2022
  • ICICIdirect Research

INDUS TOWERS REPORTS WEAK CORE PERFORMANCE ON ADJUSTED BASIS

INDUSTOWER - 362 Change: -13.95 (-3.71 %)

News: Indus Towers reported weak core performance on adjusted basis, albeit reported topline and profitability were higher owing to one-time provision writeback. The company reported net addition of 685  co-locations vs. 2555 co-location addition in Q2, and much lower than our expectations of 2585 tenancy addition. The rental revenues came in at Rs 4745 crore, up 7.9% QoQ. We highlight that Q4FY22 rental revenues included one-time provision reversal of ~Rs 547.3 crore. Thus, on adjusted basis, core rental revenues were down 4.5% QoQ vs. expectations of ~2% QoQ decline. The energy revenues came in at Rs2372 crore, down 6.3% QoQ.  . adjusting for provision reversal benefit, EBITDA was at Rs 3515 crore (our expectations Rs 3564 crore), up 3% QoQ and margins of 53.5%, flattish QoQ. PAT came in at Rs 1828.5 crore (up 16.4% QoQ), largely owing to provision reversal benefit. Adjusted PAT of Rs 1418 crore, down 9.7% QoQ was tad lower than expected.

Views: The tenancy addition momentum has seen some softness after decent traction in last few quarter  Vodafone Idea survival odds has improved and thus risk on current tenancy is lower, albeit higher debtors amount has stressed the balance sheet of Indus. The clarity on long term tenancy growth outlook along with planned foray in allied activities such as smart cities or fibre etc. are the other key things to watch out for.

Impact: Negative