Bharti Airtel (Q2 FY13)

India Infoline News Service | Mumbai |

Bharti Airtel (Q2 FY13)

CMP Rs271, Target Rs310, Upside 14.4% 
  • Q2 revenues at +1.7% qoq above estimate after adjusting for ~Rs5.9bn in one time income from TDSAT judgment
  • Disciplined approach to SG&A led to margin revival qoq to 31.3% vs est 30.6%
  • India & S Asia margin wireless revenues up 4% qoq; enterprise business surprises on the upside with 17% qoq jump
  • Africa INR revenues in line at +5.1% qoq though EBIDTA margin ahead of our estimate
  • Reported consolidated PAT slightly above our expectation but continues to be impacted by high effective tax rate qoq
  • Regulatory risks remain persistent but valuations offer attractive entry point; retain BUY with revised 9-mth target of Rs310 
Result table
(Rs m) Q2 FY13 Q1 FY13 % qoq Q2 FY12 % yoy
Net sales 202,830 193,619 4.8 172,764 17.4
Access and IUC (29,526) (27,045) 9.2 (23,311) 26.7
Network opex (46,297) (45,425) 1.9 (38,038) 21.7
License fees (16,469) (16,300) 1.0 (14,507) 13.5
Staff (9,846) (9,193) 7.1 (8,691) 13.3
S G & A (37,184) (37,169) 0.0 (30,066) 23.7
Operating profit 63,508 58,487 8.6 58,151 9.2
OPM (%) 31.3 30.2 110 bps 33.7 (235) bps
Depreciation (38,560) (37,571) 2.6 (31,839) 21.1
Interest (9,969) (9,816) 1.6 (8,796) 13.3
PBT 14,979 11,100 34.9 17,516 (14.5)
Tax (7,714) (4,878) 58.1 (4,900) 57.4
Effective tax rate (%) 52.4 38.4 1,398bps 24.6 2,776 bps
Minority & Associates 197 (205) - 44 -
Adjusted PAT 7,462 6,017 24.0 12,660 (41.1)
Adj. PAT margin (%) 3.7 3.1 57 bps 7.3 (365) bps
FX gain/(loss) (250) 1,605 - (2,390) -
Reported PAT 7,212 7,622 (5.4) 10,270 (29.8)
Source: Company, India Infoline Research

Ex-one offs, India & S Asia revenues above estimate; margin in line 

Bharti reported above estimate revenue growth in its India & S Asia business even after adjusting for ~Rs5.9bn in one time income from a favourable TDSAT judgment wrt a dispute related to interconnect agreements. EBIDTA margin was largely in line at 32.7% and up ~90bps qoq on lower SG&A spends after the aggressive marketing seen in Q1. Access charges increased qoq 180bps qoq partly due to some cost aspect related to one time income mentioned above. PAT decline 12% qoq due to a ~12ppt qoq jump in tax rate. Company had to recognize additional tax charge due to DDT relating to dividend income from Indus Towers for which no tax credit is available


India KPIs
Wireless (India) Q1 ‘11 Q2’ 11 Q3 ‘11 Q4 ‘11 Q1’ 12 Q2’ 12 Q3’ 12 Q4’ 12 Q1’ 13 Q2’ 13
Subs base (' 000) 136,620 143,292 152,495 162.203 169,187 172.783 175,653 181,279 187,302 185,922
Additions (' 000) 9,001 6,672 9,203 9,708 6,984 3.596 2,870 5,626 6,023 (1,380)
% qoq 2.8 (25.9) 37.9 5.5 (28.1) (48.5) (20.2) 96.0 7.0 -
ARPU 215 202 198 194 190 183 187 189   185 177
% qoq (2.3) (6.0) (2.0) (2.0) (2.1) (3.7) 2.2 1.1   (2.3) (4.1)
MOU/sub (mins) 480 454 449 449 445 423 419 431   433 417
% qoq 2.6 (5.4)
BSE 519.00 [2] ([0.38]%)
NSE 517.95 [2.35] ([0.45]%)

***Note: This is a NSE Chart

 

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