Bharti Airtel (Q3 FY14)

India Infoline News Service | Mumbai |

Africa EBIDTA margin at 25.8% were much below our estimate of 26.9% on higher interconnect charges (due to focus on off net traffic) and SG&A costs because of rebranding exercise especially in Nigeria.

CMP Rs302, Target Rs380, Upside 25.8% 
  • Bharti reports in line revenues, EBIDTA but PAT miss due to FX loss, one off tax provisions

  • India wireless margin gains further traction, up ~500bps in past 4 quarters; wireless revs up 2.6% qoq

  • Pricing up 3rd quarter in a row, gains 1.1% qoq but domestic traffic surprisingly tepid at +1.5% qoq despite seasonality tailwind

  • Africa margin disappoints at 25.8% on higher IUC and SG&A expenses while US$ revenues at +4.1% qoq slightly below forecast

  • Stock correction on back of fears of heightened competitive intensity in upcoming auctions overdone; current valuation offer attractive entry point and we retain BUY for unchanged 9-12mth tgt of Rs380

Result table
(Rs m)
Q3 FY14
Q2 FY14
% qoq
Q3 FY13
% yoy
Net sales
219,607
213,428
2.9
193,756
13.3
Access and IUC
(28,755)
(27,475)
4.7
(29,158)
(1.4)
Network opex
(51,140)
(49,143)
4.1
(44,302)
15.4
License fees
(18,896)
(19,565)
(3.4)
(16,784)
12.6
Staff
(11,579)
(12,206)
(5.1)
(9,891)
17.1
S G & A
(38,303)
(36,718)
4.3
(35,874)
6.8
Operating profit
70,934
68,321
3.8
57,747
22.8
OPM (%)
32.3
32.0
29 bps
29.8
250 bps
Depreciation
(39,188)
(39,394)
(0.5)
(37,351)
4.9
Interest
(8,534)
(10,608)
(19.6)
(9,834)
(13.2)
PBT
23,212
18,319
26.7
10,562
119.8
Tax
(16,569)
(8,634)
91.9
(6,190)
167.7
Effective tax rate (%)
76.2
72.0
425 bps
76.5
(32) bps
Minority & Associate
933
1,757
(46.9)
940
(0.7)
Adjusted PAT
7,576
11,442
(33.8)
5,312
42.6
Adj. PAT margin (%)
3.4
5.4
(191) bps
2.7
71 bps
FX + exceptional
(1,474)
(6,322)
BSE 516.95 [7] ([1.34]%)
NSE 517.35 [6.50] ([1.24]%)

***Note: This is a NSE Chart

 

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