Indus Towers reports weak numbers in Q1FY23.
The shares of Indus Towers fell harshly on August 3 after the company announced weak earnings for the quarter ended June. In the quarter, net profit fell 66% year on year to Rs 477 crore, while revenue increased only 1% to Rs 6,897 crore, and operating profit fell 34% to Rs 2,322 crore. The impact of a non-payment from one of the customers reduced operating cash flow by 60% to Rs 807 crore. While the company’s energy costs increased 5.3% and operating expenses increased by 18.2%.
Main reason for the weak performance.
In the reported quarter, share revenue per tower fell 11.4 percent sequentially to Rs 75,688.Overall, total towers increased to 1,027 from March 2022 quarter to 186,474, which was weaker than the past performance for the company. The company had agreed to the payment plan modification of security arrangements proposed by VI promoters for clearance of the outstanding dues. Pursuant to an agreement, Vodafone has given all of its primary pledged shares in equities issued by it to be used exclusively for clearing the outstanding dues of the company. Further, Indus has a secondary pledge over Vodafone’s remaining shares and a corporate guarantee provided by Vi’s promoters which could be used. However, it is insufficient to cover the outstanding.
Their prudent accounting practise resulted in their financial performance, as they focused on bills receivables due to the financial situation of one of our major customers. The fundamentals of the business remain strong, and the successful conclusion of the 5G auctions has further improved the outlook.
The ROCE for the company is 25.0% and the ROE is at 33.5%. The P/E ratio is at 10.2 times and 5 years’ P/E is at 17.5 times. EPS for the company is Rs.23.7. The debt to equity ratio is at 0.89 for Indus Towers. The firm has maintained a healthy dividend payout ratio of 82.96%.