Indus Towers Limited , India's leading provider of passive telecom infrastructure, has reported a mixed set of financial results for the second quarter of fiscal year 2026. The company saw an increase in revenue but experienced a decline in profitability compared to the same period last year.

Financial Highlights

Revenue Growth

Indus Towers demonstrated strong top-line performance, with revenue increasing by 9.7% year-over-year to 81.88 billion rupees in Q2 FY26. This growth indicates the company's ability to expand its business and potentially secure new contracts or increase services to existing customers.

Profitability Challenges

Despite the revenue growth, the company faced challenges in maintaining its profitability:

1. Net Profit Decline: Net profit decreased by 17.3% to 18.39 billion rupees, compared to 22.23 billion rupees in the same quarter last year.

2. EBITDA Performance: EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a slight decrease of 1.1% to 68.76 billion rupees.

3. Margin Compression: The EBITDA margin contracted significantly by 910 basis points, from 93.08% in Q2 FY25 to 83.97% in Q2 FY26.

Factors Affecting Performance

While the company has not provided specific reasons for the decline in profitability in the given data, possible factors could include:

• Increased operational costs
• Higher investments in infrastructure expansion
• Competitive pressures in the telecom infrastructure market
• Changes in the regulatory environment

Looking Ahead

Indus Towers' ability to grow its revenue in a challenging market environment demonstrates its strong market position. However, the company may need to focus on cost management and operational efficiency to improve its profitability in the coming quarters.

Investors and analysts will likely be watching closely to see how Indus Towers addresses the margin pressure and works to align its bottom-line growth with its top-line performance in future quarters.

Shares of Indus Towers experienced a significant uptick, climbing 5% to reach ₹339.95, following news of promoter Bharti Airtel increasing its stake in the company. The surge comes amidst recent developments regarding the company's expansion plans and ongoing discussions about dividend payouts.

Promoter Stake Increase

Bharti Airtel, a major promoter of Indus Towers, has bolstered its position in the company by acquiring an additional 68.74 lakh shares, representing a 0.26% stake. These purchases were executed through open market transactions between August 25 and September 1. Prior to this acquisition, promoters held a 50% stake in Indus Towers as of the end of the June quarter.

Expansion Plans and Market Concerns

The stock's performance has been influenced by recent board approvals for expansion into African markets, specifically Uganda, Nigeria, and Zambia. While this move signals growth potential, it has also raised concerns among investors regarding the company's dividend payout strategy.

It's worth noting that Indus Towers has not distributed dividends since May 2022, primarily due to delayed payments from a key customer, Vodafone Idea. This situation has contributed to investor uncertainty surrounding the company's financial decisions.

Analyst Perspectives

Despite the mixed signals, several brokerage firms maintain a positive outlook on Indus Towers:

• Ambit has set a target price of ₹525.00 for the stock.
• Citi reaffirms its buy rating with a target price of ₹460.00.
• CLSA, while trimming its target to ₹520.00, continues to maintain a positive stance on the company.

Company Response to Volume Movement

In response to a query from the BSE regarding the significant increase in trading volume, Indus Towers issued a clarification. The company stated that it has been prompt in making all material disclosures as required under SEBI regulations and has not withheld any material information.

Samridhi Rodhe, Company Secretary & Compliance Officer of Indus Towers, commented, "We understand that the increase in volume movement in the Company's share is purely due to market conditions and is driven by market forces."

The company reassured stakeholders of its commitment to adherence to compliance requirements in the interest of shareholders.

As Indus Towers navigates its expansion plans and addresses investor concerns, the market will likely continue to watch closely for any developments regarding dividend policies and the resolution of payment issues with key customers.