Bharti Airtel and Indus Tower Shares in Focus After Favourable Judgement From Delhi HC

The Delhi High Court has ruled in favour of Bharti Airtel and Indus Towers, affirming that telecom towers qualify as “movable” property and are thus eligible for input tax credit (ITC) under tax laws.

In its ruling on December 12, the court rejected the tax department’s argument that telecom towers should be classified as “immovable” property, which would render them ineligible for ITC.

Impact of Judgement

The judgment described the denial of ITC on this basis as “wholly untenable” and quashed the show cause notices issued to the companies regarding the disallowance of ITC on inputs used to build passive telecom infrastructure, such as towers.

This decision is expected to bring relief to the telecom infrastructure sector, which has faced long-standing disputes over the tax classification of its assets.

On January 16, 2025, Bharti Airtel shares rose ~2%, reaching a day high of ₹1211.85 at 12:55 PM after opening at ₹1199.85 on BSE. While Indus Tower shares opened at ₹362.45, up ~1% and touched the day high of ₹362.45.

Indus Tower Q2FY25 Performance

During Q2FY25, Indus Towers reported consolidated revenue of ₹7,465 crore for the quarter, reflecting a 4.7% year-on-year (Y-o-Y) growth. Consolidated EBITDA reached ₹4,907 crore, a 42.0% increase Y-o-Y, with an EBITDA margin of 65.7%. Net profit for the quarter stood at ₹2,224 crore, marking a 71.7% Y-o-Y increase.

The Return on Equity (Pre-Tax) improved to 38.9%, compared to 20.4% on a Y-o-Y basis, while the Return on Equity (Post-Tax) increased to 29.0%, up from 15.1% Y-o-Y. Return on Capital Employed also improved to 22.9%, from 14.0% Y-o-Y. Additionally, the Q2 FY25 results included a write-back of ₹1,077 crore in provisions for doubtful receivables, driven by collections against past overdue amounts.

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