IHS Holding Limited (IHS): A Bull Case Theory

Yahoo

2 days ago

We came across a bullish thesis on IHS Holding Limited (IHS) on Deep Value Capital's Substack. In this article, we will summarize the bulls' thesis on IHS. IHS Holding Limited (IHS)'s share was trading at $5.22 as of 28th May.
A telecommunications tower reaching high into the sky, connected to a satellite system.
IHS Holdings (IHS) is a misunderstood infrastructure powerhouse the market has mispriced as a risky, FX-exposed telecom play concentrated in Nigeria. In reality, IHS operates a high-margin telecom tower business across emerging markets like Nigeria and Brazil, where mobile data usage is surging and 4G/5G penetration is set to rise from 57% to 86% by 2029. Its model is simple and scalable: mobile carriers lease space on IHS towers via long-term, inflation-linked contracts—adding tenants drives near-pure profit, with minimal incremental cost.
This recurring, CPI-protected revenue base underpins a robust infrastructure compounding story, with management targeting $1B in run-rate free cash flow (FCF) by 2029. Recent moves validate the strategy: IHS sold a non-core fiber business at 5x its current EBITDA multiple, signaling that the market's current valuation deeply discounts its asset quality. Meanwhile, free cash flow margins are climbing, and the company is trading at a steep discount despite improving fundamentals. Management's guidance for 2025 appears conservative, hinting at a potential beat-and-raise setup.
Despite FX volatility and geopolitical noise, the math points to a 6.5x upside from current levels, with the potential for significant re-rating as investors reappraise IHS as a critical digital infrastructure enabler in fast-growing regions. In the face of rising data demand, tower utilization, and CPI-linked escalators, IHS stands to compound cash flows for years, and recent portfolio actions plus management's capital discipline bolster the bullish case. This is a classic case of market misperception creating outsized opportunity for those willing to look beyond headlines.
For a comprehensive analysis of another standout stock covered by the same author, we recommend reading our summary of their bullish thesis on Atlassian Corporation (TEAM). Since our coverage, the stock is up 2.3%.
IHS Holding Limited (IHS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held IHS at the end of the first quarter which was 17 in the previous quarter. While we acknowledge the risk and potential of IHS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IHS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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