Not Vodafone Idea, Indus Towers Is The Stock To Benefit Most From Vi's Revival Play, Says Brokerage

Amid chatter over Vodafone Idea's potential revival after a fresh relief from the government linked to its AGR-linked dues, a CLSA report has pegged Indus Towers to benefit the most from Vi's revival play.

In its latest note, CLSA has maintained a high conviction outperform on Indus Towers with an unchanged target price of Rs 565, branding the stock as the 'winner' of Vodafone Idea's potential revival.

The brokerage points out that the fresh relief for Vodafone Idea will open the doors for the cash-strapped telecom operator to raise funds, which in turn could raise tenancies for Indus Towers.

While Indus Towers is not a telecom operator, it is a key player in the telecom infrastructure play and works alongside Vodafone Idea and Bharti Airtel, providing them telecom infrastructure.

The CLSA report suggests Indus Towers is thriving on twin tenants' fresh rollouts. With strong sheet and dividend growth ahead, it has emerged as an attractive pick for the brokerage firm.

In fact, CLSA believes Vodafone Idea's fundraising should add upside to Indus’s growth of 10-11% CAGR in core revenue and Ebitda.

This comes after Vodafone Idea confirmed it has received communication from the ministry surrounding relief for its AGR-linked dues, serving as a momentary relief for the company.

However, the telecom operator is looking to raise funds as it still has to clear spectrum dues while building additional infrastructure to compete with major players such as Bharti Airtel and Reliance Jio.

Recently, Citi came out with a note on Vodafone Idea, stating that its bank debt raise plans could pave the way for another equity raise, as the cash-strapped telecom operator looks to pay off its debt and compete with its rivals.

The brokerage firm also notes that continued government support, therefore, remains critical for Vodafone Idea, with limited AGR relief being a downside, in addition to competition intensity worsening over time.