Indus Towers shares decay 13% after Supreme Court rejects recalculation of AGR case

Indus Towers shares on Thursday tumbled 13 per cent to hit a low of Rs 366.30 on the BSE following the Supreme Court’s verdict in the adjusted gross revenue (AGR) case. The court rejected the telcos’ request for recalculation.
The Supreme Court upheld its previous decision on the AGR issue and insisted that telecom companies pay the entire amount of AGR dues.
Last year, Airtel and Vi had appealed to the Supreme Court to reconsider its earlier verdict, which had rejected their claims of arithmetical errors in calculation of AGR dues by the Department of Telecommunications (DoT), and sought an open court hearing on their curative petitions.
In 2019, the Supreme Court upheld the telecom department’s AGR demand against Vi, leaving the company with a financial burden of ₹58,000 crore. Including interest, this amount rose to ₹70,320 crore by the end of FY24.
Analyst View on Indus Towers Stock
Earlier this month, global brokerage firm Goldman Sachs downgraded Indus Towers’ rating from ‘Neutral’ to ‘Sell’, reducing the target price to ₹220. The firm also set a target price of just ₹2.5 for Vi, implying a potential downside of up to 83%.
Commenting on Indus Towers, the global brokerage firm noted a mismatch between the company’s fundamentals and its current valuation. It believes Indus’ recent revaluation is exaggerated, with limited clarity on the company’s medium to long-term growth prospects.
The company also said that it would take a more positive view on Indus Towers if Vodafone Idea successfully strengthens its balance sheet.
IIFL Securities suggests that Vodafone Idea’s cash flow challenges could worsen without court intervention. However, the dismissal of the curative petition provides a positive outlook for Bharti Airtel, especially in terms of potential market share growth.
Over the last year, Indus Towers shares have gained 108 per cent, which is a year-to-date rise of nearly 90 per cent.
On August 28, 2024, the board of Indus Towers approved the buyback of up to 5.67 crore shares, which will increase Bharti Airtel’s stake in the company to over 50 per cent, effectively making Indus Towers a subsidiary of Bharti Airtel.