Indus Towers: Investment Opportunity
- 17th January 2025
Aaj Ka Bazaar
The US market reversed its earlier gains and closed in the red as big tech stocks weighed on the overall performance. Asia-Pacific stocks traded mixed. Global markets opened on a cautious note as investors await key economic data from China, which is December industrial output and retail sales figures, along with fourth-quarter GDP data. Gift Nifty indicates a weak start for the Indian markets which are expected to react to the mixed global cues and Q3 earnings on the last day of the week. On the stock front, BPCL will remain in focus as the company has signed a loan agreement worth Rs 31,802 crore with a consortium of lenders led by the State Bank of India. The funds will be used to finance planned projects at Bina.
Markets Around Us
BSE Sensex –76,594.28 (-0.58%)
Nifty 50 – 23,258.00 (-0.23%)
Bank Nifty – 48,666.00 (-1.24%)
Dow Jones – 43,230.58 (0.18%)
Nasdaq – 19,349.34 (-0.83%)
FTSE – 8,391.90 (1.08%)
Nikkei 225 – 38,359.20 (-0.55%)
Hang Seng – 19,556.91 (0.57%)
Sector: Telecom
Indus Tower: 62% Upside, Outperform List
CLSA, a Hong Kong-based brokerage, has added Indus Towers Ltd. to its ‘high conviction’ list, signaling strong confidence in the stock’s potential. The firm raised its rating on the company, setting a target price of Rs 575 per share, which suggests a 62% upside from its current price of Rs 358.6. This positive outlook comes after the company received Rs 1,900 crore from Vodafone Idea, helping reduce overdue payments by over 70%. CLSA believes this improves the company’s financial position, with a solid outlook for 4G/5G investments. The company is expected to see a 10% growth in EBITDA, strong cash flow, and a 7% free cash flow yield by FY27. Additionally, there is optimism about the return of dividends in FY25, as Vodafone Idea’s financial health improves. Indus Towers’ stock has risen 70% over the past year, significantly outperforming the Nifty 50 index.
Why it Matters:
CLSA’s bullish outlook on Indus Towers signals strong potential for significant stock growth, with a 62% upside. The company’s improved financials, driven by reduced dues from Vodafone Idea, support continued investment and cash flow growth. This adds confidence to Indus Towers’ future profitability and dividend prospects.
NIFTY 50 GAINERS
BPCL – 273.80 (2.59%)
HINDALCO – 616.20 (2.26%)
REILANCE – 1293.15 (2.11%)
NIFTY 50 LOSERS
AXISBANK – 985.05 (-5.10%)
INFY – 1830.25 (-5.09%)
ICICIBANK– 1229.30 (-1.59%)
Sector: IT
Infosys Shares Drop 6% Amid Uncertainty
Infosys shares fell 6% on January 17, following a nearly 6% drop in its American Depository Receipts (ADRs) on the NYSE. While the company’s Q3 results exceeded expectations, it revised its revenue growth forecast for FY25 to 4.5-5%, signaling potential weakness in Q4. Analysts raised concerns about possible seasonal declines, with BoFA Securities predicting a 1% drop in Q4 revenue. The company also faces uncertainty over the impact of wage hikes, which could affect margins in Q4 FY25 and Q1 FY26. Despite these concerns, Infosys reported a 4.6% rise in net profit for Q3, a slight increase in revenue, and strong deal wins, including a $2.5 billion contract. Additionally, there was optimism about increased spending in key sectors like financial services in Europe and retail in the US. Investors remain cautious due to the Q4 forecast and wage hike uncertainty, impacting the stock’s performance.
Why it Matters:
Infosys’ weak Q4 outlook and wage hike uncertainty have caused concerns, leading to a 6% drop in shares. Despite strong Q3 results and deal wins, analysts are cautious about potential seasonal revenue declines. The market is closely watching margin impacts from upcoming wage hikes.
Around the World
Most Asian stocks rose on Friday, mainly driven by strong economic data from China, including better-than-expected GDP growth and industrial production in the fourth quarter of 2024. China’s stock markets, like the CSI 300 and Shanghai Composite, gained 0.5% and 0.4%, respectively. Retail sales in December also saw a strong increase, helping boost investor sentiment. Other Asian markets, such as the Philippines and Indonesia, followed suit with gains. However, Japanese stocks, including the Nikkei 225, dropped over 1% due to concerns about a possible interest rate hike by the Bank of Japan next week. The upcoming interest rate decision in Japan is closely watched, with some expecting a hike if economic conditions continue to improve. Regional markets were cautious ahead of U.S. President-elect Donald Trump’s inauguration, given his trade tariff threats, which may lead to a trade war with China. India’s Nifty 50 and South Korea’s KOSPI both saw slight declines.
Option Traders Corner
Max Pain
Nifty 50 – 23,500
Bank Nifty – 50,000
Nifty 50 – 23,325 (Pivot)
Support – 23,258, 23,205, 23,139
Resistance – 23,378, 23,444, 23,497
Bank Nifty – 49,258 (Pivot)
Support – 49,058, 48,838, 48,637
Resistance – 49,478, 49,679, 49,889
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2 Million Indian Travelled to USA
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