Indus Towers Stock Strong Plunges 8% on Investor Fears Due to Starlink and Jio
Business and Industry Overview:
Indus Towers Limited was formed by merging Bharti Infratel Limited and Indus Towers. This made it one of the largest telecom tower companies in the world. It builds tall towers that help mobile phones work by sending signals so people can call, text, and use the internet. Big phone companies like Airtel, Vodafone Idea, and Jio use these towers instead of making their own, which saves money and helps them reach more places. Indus Towers has over 234,643 towers and 386,819 co-locations (as of December 31, 2024) and covers all 22 telecom circles in India. It also works on 5G, which will make the internet faster. Some towers use solar power to save electricity. The company helps millions of people stay connected daily by providing affordable, high-quality, and reliable services. It is committed to putting India First and Connecting Lives Across the Nation by expanding its network in both cities and villages.
India has the second-largest telecom market in the world. As of May 2024, the total number of telephone subscribers was 1.2 billion, and the teledensity was 85.87%. The demand for 5G smartphones is rising, making India the second-largest market for 5G devices after China. India holds 13% of the global 5G smartphone market, while China leads with 32%. The smartphone market grew by 3% in volume and 12% in value in Q3 2024. Major telecom companies in India include Jio (474.61 million users), Airtel (387.76 million users), Vodafone Idea (218.15 million users), and BSNL (86.32 million users). The number of wired broadband users stood at 41.31 million in May 2024. Wireless broadband subscriptions reached 884.01 million in FY24. India’s internet subscribers grew to 936.16 million by April- December 2024. The country also saw over 28 billion mobile app downloads in 2022, accounting for 5% of the global total. The government is investing heavily in 5G infrastructure, with plans to fiberize telecom towers and deploy 1.2 million new towers. As of now, only 36% of towers are fiberized. The telecom sector’s gross revenue stood at Rs. 2.4 lakh crore (US$ 29 billion) in FY24. The government increased Foreign Direct Investment (FDI) from 74% to 100%, attracting US$ 39.32 billion in FDI between April 2000 and March 2024. The Bharat 6G Alliance is working with European telecom companies to develop 6G technology. Investments in data centers are also growing, with Rs. 2,000 crore (US$ 242.33 million) invested in Pune in May 2023. Companies like Jio, Airtel, and Google are making big investments in India’s digital growth. The government launched a Rs. 12,195 crore (US$ 1.65 billion) Production Linked Incentive (PLI) scheme, encouraging telecom equipment manufacturing.
Latest Stock News:
Indus Towers’ shares dropped 8% intraday on Wednesday after Starlink, owned by Elon Musk’s SpaceX, announced its entry into India. Starlink provides internet using satellites instead of mobile towers. This can reduce the need for telecom towers, affecting companies like Indus Towers. Jio Platforms and Bharti Airtel have partnered with SpaceX to bring Starlink’s services to India. This increases competition in the telecom industry. Later, Indus Towers’ stock closed 4.89% lower at ₹324.80, bringing its market value down to ₹85,687 crore.
Vodafone Idea’s stock also dropped 3.54% to ₹7.08 and fell 6.40% intraday to ₹6.87. Vodafone Idea is losing customers, with 1.71 million users leaving in December. The company’s market share dropped to 18.01% from 18.19%. Analysts believe Vthat odafone Idea must stop losing customers to survive. The company plans to invest heavily in improving its network, but it needs more money and government support.
Indus Towers has over 234,643 towers and 386,819 co-locations (as of December 31, 2024). It covers all 22 telecom circles in India. Its main customers are Airtel, Vodafone Idea, and Jio, which are India’s largest telecom service providers. Indus Towers is also working on 5G expansion and using solar power to save energy.
Despite its strong presence, Indus Towers faces risks. Satellite Internet can reduce the need for mobile towers, affecting its future growth. Investors are closely watching how Starlink, Jio, and Airtel’s partnerships impact the industry. Indus Towers plays a big role in keeping India connected, but it must adapt to new challenges in the telecom market.
Potentials:
Indus Towers expects strong growth in FY25 as its key customers, Bharti Airtel and Vodafone Idea, expand their networks. Airtel is focusing on rural broadband expansion by adding 25,000 new sites. Vodafone Idea plans to set up over 60,000 new connections for 4G and 5G in important markets. Despite the competition, Indus Towers is in a strong position because of its large tower network across India and experience in helping Vodafone Idea with network planning.
The company recently raised ₹23,000 crore in funding, which will help with expansion. Indus Towers’ financial strength, execution skills, and network reach give it a good chance to benefit from Vodafone Idea’s growth. Company leaders are confident that Indus Towers will secure a large share of new business, leading to higher revenues. According to CFO Vikas Poddar, the company has a solid track record and will continue to grow its business despite the competition.
Analyst Insights:
- Market capitalisation: ₹ 88,609 Cr.
- Current Price:₹ 329
- 52-Week High/Low: ₹ 461 / 227
- Stock P/E: 8.80
- Dividend Yield: 0.00 %
- Return on Capital Employed (ROCE): 22.1 %
- Return on Equity: 24.2 %
Indus Towers is a strong company in the telecom sector. Its stock price looks cheap compared to other companies. The P/E ratio is 8.80, which is lower than that of Kore Digital (24.32) and Suyog Telematics (14.42). This means the stock may be undervalued. The company’s revenue grew 5% in the last year to ₹29,589 Cr. It has a high profit margin of 50%, which shows strong earnings. It also has a good return on equity (24.2%) and return on capital (22.1%), meaning it is using money well.
However, there are some risks. Promoter holding dropped from 68.99% to 50%, which could be a concern. The company also has a debt of ₹21,358 Cr. Despite this, its strong financials make it a good investment. I recommend a BUY with a target price of ₹420 in the next 6 to 12 months. This gives a 27% possible profit from the current price.