Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indus Towers Ltd (BOM:534816, Financial) reported a 100% collection rate against monthly billing from a major customer, with improved collections on past overdue accounts.
- The company added 3,748 micro towers and 4,308 co-locations in Q2, demonstrating strong operational performance despite adverse weather conditions.
- Revenues grew by 4.7% year-on-year to INR74.7 billion, with core rental revenues increasing by 8.5% year-on-year.
- EBITDA increased by 42% year-on-year, with margins improving to 65.7%, indicating strong profitability.
- The company is expanding its renewable energy portfolio, with over 25,000 solar sites, contributing to sustainability goals.
Negative Points
- Adverse weather conditions, such as floods and heavy rainfall, impacted tower rollouts, posing operational challenges.
- The company faces a GST show cause notice regarding tax credits on passive infrastructure assets, which could pose a financial risk.
- Energy margins have been weaker in recent quarters due to seasonal impacts and reconciliation challenges.
- There is uncertainty regarding the timeline for resolving past overdue collections from a major customer.
- The finance cost has increased, with fluctuations in finance income affecting net finance costs.
Q & A Highlights
Q: Can you help us understand the competitive dynamics, particularly with the consolidation of two or three players? Are there any changes in rental terms or migration of tenancies?
A: We have not seen any impact from the consolidation in the tower side. Our focus remains on capturing market share and maintaining strong operational performance. β Prachur Sah, CEO
Q: As your rental contracts come up for renewal, what discounts are we seeing?
A: The renewal framework remains consistent with what was signed in FY22. There have been no major lumpy renewals in the last two financial years, and discount levels are similar to what was previously worked out. β Vikas Poddar, CFO
Q: This quarter shows tenancy growth higher than tower growth, indicating additional tenancies from BSNL and Vodafone. Will this trend continue?
A: We expect this growth to continue as our major customers roll out more. Our strong tower rollout positions us well to capture this growth. β Prachur Sah, CEO
Q: How should we view the finance cost going forward, as it has increased recently?
A: The finance cost is stable at a gross level, but net finance cost fluctuates due to interest collection on overdues. It's difficult to predict as it depends on finance income. β Vikas Poddar, CFO
Q: Can you share your thoughts on dividend payments with improved cash collection and lower CapEx?
A: We have a clear dividend policy to distribute free cash flow. The Board will evaluate at the end of the year based on collections and cash flow. β Prachur Sah, CEO and Vikas Poddar, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
