Indus Towers Limited — Q2 FY26 earnings call

Call held 28 Oct 2025

Management summary

Indus Towers reported a robust Q2 FY26 with total revenue of INR 81.9 billion, up 9.7% YoY, and adjusted EBITDA growing 14.9% YoY. The company added 4,301 macro towers and 4,505 co-locations, maintaining a stable tenancy ratio of 1.62. A key strategic move was the announcement of its foray into Africa. However, reported EBITDA saw a 6% YoY decline due to prior year write-backs, and energy margins remained negative at -4.8% due to adverse weather conditions and higher diesel consumption.

Highlights

  • Total revenue increased by 9.7% YoY to INR 81.9 billion, driven by strong tower additions.

  • Adjusted EBITDA grew by 14.9% YoY and 2.4% QoQ, indicating effective cost management.

  • Added 4,301 macro towers and 4,505 co-locations, demonstrating robust network expansion.

  • Maintained industry-leading tenancy ratio at 1.62, showcasing efficient asset utilization.

  • Achieved high network uptime of 99.97% amidst severe monsoon season, highlighting operational resilience.

Concerns

  • Reported EBITDA declined 6% YoY due to write-backs in the prior year period, masking underlying growth.

  • Energy margins remained negative at -4.8% in Q2, impacted by higher diesel usage due to prolonged monsoon and challenging site conditions.

  • Free cash flow declined sequentially to INR 3.0 billion due to increased capex and a timing gap in collections, leading to a rise in trade receivables.

Key financials

  1. Total Revenue ₹8,190 Cr +9.7%YoY
  2. Core Rental Revenue ₹5,240 Cr +11.3%YoY
  3. Reported EBITDA ₹4,610 Cr -6%YoY
  4. Reported EBITDA Margin 56.3% -9.4%YoY
  5. Adjusted EBITDA Growth (YoY) — +14.9%YoY
  6. Energy Margin -4.8%
  7. Reported PAT ₹1,840 Cr -17.3%YoY
  8. Adjusted PAT Growth (YoY) — +18.6%YoY
  9. Free Cash Flow ₹300 Cr
  10. Macro Towers Added 4,301 units
  11. Co-locations Added 4,505 units
  12. Tenancy Ratio 1.62
  13. Solar Sites Added 3,900 units
  14. Network Uptime 100%

What they filed

Q1 FY27: revenue up 4.6%, net profit up 0.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue7,465 7,547 7,727 8,058 8,188 +10%8,146 +8%8,101 +5%8,431 +5%
EBITDA4,864 6,958 4,395 4,390 4,572 −6%4,468 −36%4,424 +1%4,478 +2%
Net profit2,224 4,003 1,779 1,737 1,839 −17%1,776 −56%1,793 +1%1,746 +1%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Upgrades relating to 5G and additional battery banks
    • Tower strengthening and maintenance (aging portfolio)
    • Customer-driven growth capex (battery, solar, layer additions)
    Vikas Poddar: "So on the capex, Pranav, the increase in capex, apart from the maintenance that you're seeing is, again, if you look at the rollout numbers, our rollout numbers itself is higher by about 1,800 in this quarter. So that obviously has led to higher capex in Q2. And apart from that, there are basically upgrades relating to 5G and additional battery banks and so on, which has also resulted in higher capex outside the maintenance capex." Prachur Sah: "No, battery capex comes in two places. Once it comes in maintenance, which is a regular replacement capex. But however, there are upgrade capex, which includes battery, solar, layer additions, which is at the request of the customer, where the customer wants us to add infra on our side that results in a revenue for us. So when Vikas is talking about growth capex, this is all customer-driven capex."
  • Debt Debt disclosed
    Vikas Poddar: "Saurabh, while we are working through the business plan and the capital requirement and so on, I think while from a full-scale perspective, that could be the level of capex maybe in some time, in our capital structure, we will certainly desire to have both a good mix of debt and equity. So there will be a good amount of leverage that we are expecting." Prachur Sah: "I think we have a very strong balance sheet and opportunity to see how we can use our leverage to expand in Africa, and that is the intent."

Guidance & targets

Shareholder Returns

  • Dividend distribution timeline Shareholder Returns · Q4 FY26 · High confidence End of financial year
    the Board will consider and is committed to distribute the cash to the shareholders. And the timing still remains end of the financial year in Q4.

    — Prachur Sah

Africa Expansion

  • Initial rollout timeline Africa Expansion · within 3 to 6 months · Medium confidence 3 to 6 months
    I think our estimate is anywhere between 3 to 6 months, but I would not hold on to it, and we'll keep you posted as we progress. But anywhere between 3 to 6 months is what we are targeting from today.

    — Prachur Sah

Market context

  • Robustness of growth outlook in India Growth Outlook · next 3 to 4 quarters · High confidence Robust
    I think for the growth outlook for the next 3 to 4 quarters, we remain confident that it is going to remain robust in India.

    — Prachur Sah

What to watch in Q3 FY26

Dividend distribution

Q4 FY26
Current Committed for FY26
Target Actual distribution by Q4 FY26

Why it matters

Dividend distribution is a key shareholder return commitment, and its execution will signal financial health and clarity on regulatory matters.

Prachur Sah: "the Board will consider and is committed to distribute the cash to the shareholders. And the timing still remains end of the financial year in Q4."

Risks & concerns

  • Impact of prolonged monsoon and extreme weather on operations and costs

    medium

    The quarter witnessed challenging weather conditions, including devastating floods, leading to higher electricity outages and increased diesel consumption, impacting energy margins.

    Management acknowledged

  • Increasing trade receivables due to timing gap in collections

    medium

    Free cash flow declined sequentially due to an increase in capex and a timing gap in collections, leading to a rise in trade receivables.

    Management acknowledged

  • Africa expansion risks: dividend upstreaming and currency volatility

    medium

    Analysts raised concerns about potential issues with dividend upstreaming and currency volatility in African markets, which management acknowledged and plans to mitigate.

    Analyst acknowledged

Q&A highlights

5 direct
Growth outlook in India and Africa expansion strategy Direct
for the growth outlook for the next 3 to 4 quarters, we remain confident that it is going to remain robust in India. On the second part, when you talked about expansion in Africa, whether it's organic or inorganic. See, as I mentioned earlier, the initial part is organic growth. We will be entering and making new towers, expanding or understanding the local market.

Clarifies the company's confidence in domestic growth and the initial organic approach for Africa expansion, addressing diversification concerns.

Asked by Sachin Salgaonkar

Dividend distribution timeline post AGR clarity Partial
the Board will consider and is committed to distribute the cash to the shareholders. And the timing still remains end of the financial year in Q4.

Provides clarity on the company's commitment to dividend distribution and the expected timeline, which was a key investor concern.

Asked by Sachin Salgaonkar

Rationale for Africa expansion given past reluctance and high capex per tower Direct
I think what we can say today is that we are currently at a point where Indus Towers has established itself as a leading tower company, and we are currently in a point where we can offer solutions to the customers with a very different proposition. Even our Africa market has evolved quite a bit, and there's a lot of growth opportunities that we are currently seeing. And with an anchor customer being present there, I think that gives us the ability to step into a growing market.

Explains the strategic shift for Africa entry, emphasizing current capabilities, market evolution, and the presence of an anchor customer.

Asked by Sanjesh Jain

Increase in maintenance capex Direct
one is, of course, the portfolio is aging. So we need to keep investing in tower strengthening and tower maintenance and so on. ... Two, like I said, we are also sort of transitioning to higher performing batteries like the lithium-ion and so on. So to that extent, that transition will also have some costs in the couple of quarters.

Provides reasons for the increased maintenance capex, linking it to aging infrastructure and strategic technology upgrades.

Asked by Sanjesh Jain

Reasons for increasing energy under-recoveries/negative energy margins Direct
our business volume and the number of towers, etc., are also growing... the weather disruptions and the sort of monsoon effect, etc., are also worsening year-on-year... We have built far more towers in geographies where the EV availability or the grid electricity availability is very challenging.

Addresses a key profitability concern by detailing the multiple factors contributing to negative energy margins, including volume growth and environmental challenges.

Asked by Vivekanand S.

Risks associated with Africa expansion, specifically currency volatility and dividend upstreaming Partial
the good thing is, as I mentioned to you earlier, we are going with an anchor customer that has been there for quite a long time, and they have understood the market, the currency fluctuations, etc. So I think that will give us an opportunity to understand and not take undue risks... However, it's a little bit early in terms of what the structure of MSA, etc., is going to be.

Acknowledges the specific risks for Africa but indicates reliance on the anchor customer's experience and early-stage planning to mitigate them.

Asked by Pranav Kshatriya

Funding for Africa expansion and its relation to India's free cash flow Direct
while we are working through the business plan and the capital requirement and so on, I think while from a full-scale perspective, that could be the level of capex maybe in some time, in our capital structure, we will certainly desire to have both a good mix of debt and equity... Africa is a little bit of a long-term strategy. And distribution of the cash flow that we generate here is probably unrelated to the Africa expansion.

Clarifies the funding strategy for Africa (debt/equity mix) and explicitly states that India's free cash flow would not be used for this purpose, addressing capital allocation concerns.

Asked by Saurabh Handa

2 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Indus Towers Limited reported a total revenue of INR 81.9 billion for Q2 FY26, marking a 9.7% year-on-year growth. Core rental revenues contributed INR 52.4 billion, up 11.3% YoY. Reported EBITDA stood at INR 46.1 billion, a 6% decline YoY but a 5.1% QoQ increase, with an EBITDA margin of 56.3%. Adjusted for prior period write-backs, EBITDA grew 14.9% YoY. Profit after tax was INR 18.4 billion, down 17.3% YoY but up 5.9% QoQ, with adjusted PAT growing 18.6% YoY.

Operational Highlights and Network Expansion

The company demonstrated robust operational performance, adding 4,301 macro towers and 4,505 co-locations during the quarter, leading to a year-on-year growth of 11.5% and 9.6% in tower and co-location base, respectively. The industry-leading tenancy ratio remained stable at 1.62. Despite challenging weather conditions, including devastating floods, the network uptime was maintained at approximately 99.97% in Q2 FY26, an improvement from 99.955% in Q1 FY26.

Africa Foray and Growth Strategy

Indus Towers announced its strategic foray into Africa, commencing with Nigeria, Uganda, and Zambia. This move is part of a long-term growth strategy, aiming to replicate its proven operating model in high-growth markets. The initial phase will involve organic growth by building new towers, leveraging an anchor customer's presence, and focusing on delivering cost-efficient infrastructure and high service quality. The company expects initial rollout activities to commence within 3 to 6 months.

Cost Efficiency and Sustainability Initiatives

Driving cost efficiency remains a key priority, with efforts focused on redefining operating processes, upgrading site infrastructure with IoT-based devices, and leveraging digital tools for process automation. The company added 3,900 solar sites during the quarter, bringing the total base to approximately 36,000, as part of its transition to cleaner energy sources and reduction of diesel dependency. Workplace safety and gender diversity (15.8% in Q2 FY26, up from 14.3% last year) also saw improvements.

Energy Management and Challenges

Energy margins remained negative at -4.8% in Q2, compared to -4.0% in Q1. This was primarily attributed to the prolonged monsoon season, which led to higher electricity outages and increased diesel consumption to maintain network uptime. The company acknowledged that while business volumes and tower count are growing, the challenges of grid availability in remote and difficult terrains contribute to higher energy costs. Efforts continue to reduce diesel consumption and improve energy efficiency.

Capital Allocation and Shareholder Returns

Free cash flow for the quarter was INR 3.0 billion, a sequential decline attributed to increased capex and a timing gap in collections, which also led to a rise in trade receivables. The Board remains committed to distributing cash to shareholders, with the timeline for consideration still set for the end of the financial year (Q4 FY26). For the Africa expansion, the company plans to fund it through a mix of debt and equity, leveraging its strong balance sheet, and clarified that India's free cash flow would not be used for this purpose.

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