Jefferies Downgrades Indus Towers to 'Underperform', Sees 14% Downside

The brokerage has cut its target price on Indus Towers to Rs 375 from Rs 530 -- implying a downside of about 14 per cent from current levels.

It said the downgrade reflects near-term uncertainties and structural pressures that could limit upside in the stock despite a stable operating environment.

Jefferies noted that the risk-reward for the company has turned less favourable, with modest earnings growth and dividend yield unlikely to offset emerging concerns.

The brokerage has reduced its revenue and profit after tax estimates by 2-6 per cent, projecting just 3 per cent earnings per share growth and a 4 per cent yield going forward.

Following the downgrade, Indus Towers shares declined sharply on the BSE, falling as much as 3.5 per cent during intra-day trade to Rs 423 apiece.

The stock was still down 2.7 per cent at around 11:50 AM, even as the broader BSE Sensex was trading 1.5 per cent higher.

Trading activity remained elevated, with nearly 0.95 million shares changing hands, significantly above the two-week average volume.

The brokerage highlighted that a key concern is the bunching of tower lease renewals in FY27, which could weigh on revenue visibility and growth.

A large number of Indus Towers' sites are up for renewal between the second half of calendar year 2026 and the first half of 2027, raising the risk of pricing pressure during renegotiations.

Jefferies warned that moderation in incremental site additions across the telecom sector may intensify competition for renewals, forcing the company to either offer higher discounts or risk losing tenants to rival tower operators.

It also pointed out that any discount extended to one telecom operator may need to be replicated for others, including Vodafone Idea and Bharti Airtel, potentially impacting overall revenues.

- IANS