Indus Tower Net Profit Declines 56% Despite an Increase in Revenue: Here’s Why

Synopsis: The telecom infrastructure firm operating wireless towers across India and Africa reported a 56 percent YoY profit decline to Rs. 1,776 crore despite 7.9 percent revenue growth, due to a one-time accounting gain last year.

The large cap company engaged in the operation and maintenance of wireless communication towers and related infrastructures for various telecom service providers in India, Nigeria, Uganda, and Zambia is in stoplight after announcing Q3 Results.

With a market capitalization of Rs. 1,13,559.72 crore, the shares of Indus Towers Limited were trading at Rs. 430.45, down by 0.31 percent from its previous day’s closing price of Rs. 431.80. 

Q3FY26 Results

Indus Tower reported Q3FY26 revenue of Rs. 8,146 crore, marking a YoY growth of 7.9 percent compared with Rs. 7,547 crore in Q3FY25. On a QoQ basis, revenue was largely flat, declining marginally by 0.5 percent from Rs. 8,188 crore in Q2FY26, indicating stable topline momentum.

EBITDA for Q3FY26 stood at Rs. 4,468 crore, but profitability weakened sharply on an annual basis, with EBITDA declining 35.8 percent YoY from Rs. 6,958 crore in Q3FY25. Sequentially, EBITDA slipped 2.3 percent QoQ from Rs. 4,572 crore in Q2FY26, reflecting margin pressure during the quarter.

Net profit came in at Rs. 1,776 crore in Q3FY26, down 55.6 percent YoY from Rs. 4,003 crore in the year-ago period. On a QoQ comparison, profit declined 3.4 percent from Rs. 1,839 crore in Q2FY26, highlighting continued pressure on the bottom line despite steady revenue performance.

Why Has Profit Declined?

The sharp decline in profit and EBITDA in Q3FY26 is largely due to an abnormally low expense base in Q3FY25, which had inflated profitability last year. In Q3FY25, revenue stood at Rs. 7,547 crore while total expenses were just Rs. 589 crore, resulting in an unusually high EBITDA of Rs. 6,958 crore. This distortion was caused by a one-time accounting adjustment, where “allowances for doubtful receivables (net)” were recorded at – Rs. 3,024.1 crore, significantly reducing total expenses and artificially boosting EBITDA and profit.

In contrast, Q3FY26 reflects normalised operations, with revenue rising to Rs. 8,146 crore, but total expenses increasing to Rs. 3,678 crore, leading to a lower yet more sustainable EBITDA of Rs. 4,468 crore. As a result, the YoY decline in EBITDA and profit is not due to operating weakness, but due to the absence of last year’s exceptional negative expense item, making Q3FY25 a high base effect rather than a true comparison.

Indus Towers Limited is a telecom infrastructure company providing tower and related passive infrastructure services to telecom operators across India and select African markets. It operates and maintains wireless towers, small cells, fiber connectivity, and smart digital infrastructure, and was formerly known as Bharti Infratel before being renamed in 2020.

Over the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 35 percent, a profit CAGR of 26 percent and a price CAGR of 11 percent, reflecting both its operational performance and market confidence.

A return on equity (ROE) of about 32.5 percent and a return on capital employed (ROCE) of about 29 percent, and debt to equity ratio at 0.58 demonstrate the company’s financial position. The stock is currently trading at a P/E of 15.9x slightly higher as compared to industry P/E of 15.6x.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Indus Tower Net Profit Declines 56% Despite an Increase in Revenue: Here’s Why appeared first on Trade Brains.