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Investing.com - Kotak has upgraded Indus Towers Ltd (NS:INDUSTOW) from Sell to Buy and raised its price target to INR400.00 from INR365.00, citing overdone concerns about payout uncertainty and capital allocation related to the company’s African expansion.
The research firm expects Indus Towers to benefit from a gradual uptrend in tenancy ratio, which should drive 8% EBITDA and 10.5% EPS compound annual growth rates over fiscal years 2025-2028.
Kotak predicts Indus will resume dividend payments in fiscal year 2026 with a 90% payout ratio, representing a 7% yield, as Vodafone Idea (Vi) gradually rolls out its network in what the firm describes as a "3+1 market structure."
The firm believes investments in Africa will be "gradual and measured," leveraging Bharti’s leadership position in select countries on the continent.
According to Kotak’s analysis, Indus Towers stock currently trades at an attractive 6.4X EV/EBITDA and offers a 7.1% free cash flow yield for fiscal year 2027.
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