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    Indus Towers Q1 FY26 earnings call

    INDUSTOWER
    Telecommunication·31 Jul 2025
    Management Summary

    Indus Towers reported a strong start to FY26 with robust revenue growth and significant tower and co-location additions, maintaining market leadership. However, profitability metrics like EBITDA and PAT saw declines due to margin compression and increased diesel consumption from adverse weather. The company continues to focus on operational efficiency, sustainability, and cash conservation, with the Board deferring dividend decisions to year-end.

    Highlights

    5

    • Gross revenues grew by 9.1% YoY to INR 80.6 billion, indicating a strong start to the financial year.

    • Core revenue from rental increased by 10.1% YoY to INR 51.1 billion, driven by significant tower and co-location additions.

    • Added 2,468 macro towers and 5,777 co-locations, translating to YoY growth of 11.4% and 9.7% respectively.

    • Maintained a high network uptime of 99.96% in Q1 FY26 despite adverse weather conditions.

    • Strong free cash flow generation of INR 15.7 billion and a reduction of INR 4 billion in trade receivables.

    Concerns

    4

    • Reported EBITDA declined 3.4% YoY and 2.4% QoQ to INR 43.9 billion, with margin compression.

    • EBITDA margin was lower by 7.1 percentage points YoY and 2.4 percentage points QoQ at 54.5%.

    • Diesel consumption increased by 10% YoY in Q1 FY26 due to unusually high weather-related disturbances.

    • Profit after tax fell by 9.8% YoY and 2.4% QoQ to INR 17.4 billion.

    What Changed2

    vs Q2 FY26

    Guidance items6 → 5 (-1)Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    11 metrics
    1. 01Gross Revenues₹8,060 Cr+9.1%YoY
    2. 02Core Rental Revenue₹5,110 Cr+10.1%YoY
    3. 03EBITDA₹4,390 Cr-3.4%YoY
    4. 04EBITDA Margin54.5%
    5. 05Profit After Tax₹1,740 Cr-9.8%YoY

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Debt disclosed

    Guidance & targets

    4
    CategoryTargetPriority
    Volume
    Tower additions growth vs. last year
    not lower
    		High
    Profitability
    Energy margin improvement
    improvement
    		Medium
    Capex
    High maintenance capex period
    3 to 4 years
    		High
    Shareholder Returns
    Dividend decision
    revisit decision
    		High

    What to watch in Q2 FY26

    4

    Board's decision on dividend policy

    end of financial year
    CurrentConserving cash, decision deferred
    TargetRevisit decision at the end of financial year

    Why it matters

    This will determine the timing and quantum of shareholder returns.

    Prachur Sah: "The Board will continue to monitor the evolving situation closely and reassess its decision by the end of financial year."

    Risks & concerns

    3
    RiskSeverity

    Increased Diesel Consumption due to Weather

    Unusually high number of weather-related disturbances (heavy rainfall, thunderstorms) in Q1 FY26 led to a 10% YoY increase in diesel consumption, impacting energy margins. — Management acknowledged

    medium

    Elevated Maintenance Capex from Aging Portfolio

    The company's aging portfolio and strategic transition to lithium-ion batteries will result in 3-4 years of high maintenance capex, though it leads to lower total cost of ownership. — Management acknowledged

    medium

    Energy Billing Reconciliation Issues

    Analyst highlighted ongoing energy billing reconciliation issues; management stated smart meter deployment is a longer-term solution with initial progress in some states. — Analyst acknowledged

    medium

    Q&A highlights

    7

    “I think when the committee made a decision, it was not just based on one factor. There were many factors that were considered which included the stability of the customer. And the opportunities that you mentioned. So I think there was no specific change per se, but I think it is a conscious call that the Board has taken in terms of conservation of cash, and they will revisit the decision at the end of the financial year.”

    Analyst questioned the change in dividend policy given customer stability; management reiterated cash conservation and future review.

    asked by Sachin Salgaonkar

    3 min read6 chapters

    Detailed Narrative

    01

    Strong Operational Performance and Market Share Retention

    Indus Towers commenced the financial year with robust operational momentum, securing a majority market share in customer rollouts. The company added 2,468 macro towers and 5,777 co-locations during Q1 FY26, leading to a total base of 251,800 macro towers and 411,200 co-locations. This performance translated into a healthy incremental tenancy ratio of 2.3, maintaining the portfolio tenancy ratio at 1.63. The company's focus on speed, quality, and proactive acquisition model also led to the highest-ever IBS deployments in its history.

    02

    Financial Overview and Profitability Trends

    The company reported gross revenues of INR 80.6 billion, a 9.1% YoY increase, with core rental revenue growing 10.1% YoY to INR 51.1 billion. However, reported EBITDA declined 3.4% YoY to INR 43.9 billion, resulting in an EBITDA margin of 54.5%, down 7.1 percentage points YoY. Profit after tax also decreased by 9.8% YoY to INR 17.4 billion. Adjusted for one-off📎 write-backs and common control accounting impacts, EBITDA grew 13.6% YoY and PAT grew 23% YoY, indicating underlying business strength.

    03

    Energy Efficiency and Smart Meter Deployment

    Energy cost remains a key focus, with the company working to reduce diesel dependence. Despite a 10% YoY increase in diesel consumption in Q1 FY26 due to early monsoon and weather disturbances, Indus Towers continues to electrify non-electrified sites and deploy energy storage solutions. The solar site count reached over 32,000, with 2,250 sites added during the quarter. The company is also actively pursuing the deployment of smart meters across sites to improve billing accuracy and reconciliation, a longer-term project with initial progress in some states.

    04

    Capital Allocation Strategy and Dividend Policy

    The Board has decided to conserve cash in the short term, deferring the decision on distributions to shareholders until the end of the financial year. This decision considers the evolving industry landscape, customer stability, elevated capex needs, and inorganic growth opportunities. Management clarified that cash generated, including from overdue receivables collection (INR 4 billion reduction this quarter), is being preserved and will be available for distribution once the Board revisits the policy.

    05

    Elevated Maintenance Capex and Network Uptime

    The company is experiencing an elevated period of maintenance capex, with almost INR 11 billion spent in H1 FY26, compared to INR 11.9 billion for the full calendar year 2024. This is attributed to an aging portfolio requiring tower strengthening and a strategic transition to higher upfront cost, but lower TCO, lithium-ion batteries. Despite challenging weather conditions in Q1 FY26, the company maintained a high network uptime of 99.96%, demonstrating the resilience and commitment of its field teams.

    06

    Regulatory Environment and 5G Adoption

    The regulatory environment remains supportive, with RoW rules 2024 adopted by nearly 31 states and union territories, and the Green Energy Open Access policy notified in 28 states. Total 5G base stations marginally increased to around 487,000. While deployment momentum has slowed, 5G-related contributions are a meaningful driver for loading revenue. The company anticipates a natural rise in demand for additional sites as 5G adoption deepens and network congestion eases.

    This is an AI-generated summary of a publicly available earnings call transcript.