Analysts who have coverage on tower company Indus Towers Ltd. believe that the company can pay a special dividend to its shareholders once its past dues are cleared by Vodafone Idea.

Vodafone Plc will be selling its remaining 3% stake in Indus Towers through a block deal and the proceeds will be first used to repay Vodafone Plc’s lenders outstanding of $101 million.

The rest will be used partially to clear Vodafone Idea’s past dues of ₹3,600 crore through an equity infusion. The board of Vodafone Idea will meet on December 9 to consider a preferential issue of shares to a promoter group company for a sum not exceeding ₹2,000 crore.

Brokerage firm Citi wrote in its note that the sum used by Vodafone Idea for clearing the past dues to Indus Towers adds up to ₹7 per share for Indus Towers, which, according to them, could be paid as dividend.

Citi wrote in its note that this ₹7, along with free cash flow generation of Indus Towers could enable the company to pay between ₹11 to ₹12 per share as dividend for the second half of financial year 2025.

The brokerage also goes on to say that the dividend amount to increase to ₹20 per share per annum in financial year 2026 and 2027 each.

At current levels, this assessment implies a dividend yield of 6% over financial year 2026-27 for Indus Towers, which Citi finds compelling.

Citi has a “buy” recommendation on Indus Towers with a price target of ₹485.

JPMorgan also wrote in a note that clearing of Indus Towers’ past dues could result in shareholders getting a special dividend of ₹7.5 per share.

Out of the 23 analysts that have coverage on Indus Towers, 12 of them have a “buy” rating on the stock, five of them say “hold”, while six have a “sell” recommendation on the stock.

Shares of Indus Towers ended 1.5% higher on Wednesday at ₹359.3. The stock is down 22% from its recent peak of ₹460. Despite the correction from the top, Indus Towers shares are up 77% so far in 2024.