Jefferies has downgraded Indus Towers, a leading telecommunications tower company in India, to 'underperform' and cut its price target to ₹375. The downgrade stems from emerging risks related to tower contract renewals, with about 10% of the sites deployed in 2016-17 set for renewal in the latter half of 2026 and early 2027. This renewal period coincides with a slowdown in industry-wide tower additions, heightening competition among tower companies to retain clients such as Bharti Airtel and Vodafone Idea. Jefferies anticipates that Indus Towers may need to offer discounts to maintain these tenancies, which could negatively impact overall revenues. The brokerage has projected a 2-2.5% reduction in revenue and EBITDA estimates for FY27 and FY28, alongside a potential profit decline of up to 6% due to renewal uncertainties and rising depreciation costs from increased capital expenditures. Despite a 30% drop in tower additions in the first nine months of FY26, capital expenditure has surged, primarily due to increased maintenance spending and investments in energy infrastructure, such as solar energy solutions. Jefferies expects overall capital expenditure to remain elevated between ₹72,000–80,000 crore annually from FY26 to FY29, which may limit free cash flow and dividend payouts, estimating free cash flow at only ₹15-19 per share during this period. The growth outlook for Indus Towers appears modest, with projected revenue growth of 4% and earnings growth of 3% over the same period. The valuation has been adjusted to a target multiple of 6.5x EV/EBITDA, reflecting a potential downside of approximately 14% from current levels, as the near-term risk-reward is considered unfavorable.