Bharti Infratel (Q4 FY14)

India Infoline News Service | Mumbai |

Bharti Infratel reported 2.2% qoq rise in revenues led by higher tenancies at both standalone and consolidated level.

CMP Rs210, Target Rs235, Upside 12.1% 
  • Bharti Infratel reported 2.2% qoq rise in revenues, higher than our 0.9% estimate driven by higher tenancies at both standalone and consolidated level

  • EBIDTA margin remained flat qoq vs expectation of 46bps decline as higher repair and other overheads offset by lower energy and rental costs

  • Capex ramped up to 20% of sales (to Rs5.6bn) from 13% in previous quarter; PAT up ~15% qoq, exceeds forecast on higher other income and flat margin

  • We retain our positive stance on the company supported by a robust rise in tenancies and raise FY15/16 EBIDTA and PAT estimates; recommend BUY with revised 9-12mth target of Rs235

Result table
(Rs m) Q4 FY14 Q3 FY14 % qoq Q4 FY13 % yoy
Net sales 27,899 27,311 2.2 26,736 4.3
Power & fuel (9,921) (10,302) (3.7) (9,825) 1.0
Rent (2,235) (2,278) (1.9) (2,816) (20.6)
Repair & maint (2,459) (2,079) 18.3 (2,322) 5.9
Staff (952) (924) 3.0 (807) 18.0
Other expenses (806) (445) 81.1 (1,035) (22.1)
Operating profit 11,526 11,283 2.2 9,931 16.1
OPM (%) 41.3 41.3 - 37.1 417 bps
Depreciation (5,153) (5,252) (1.9) (5,655) (8.9)
Interest (826) (792) 4.3 (1,067) (22.6)
Other income 1,445 917 57.6 1,487 (2.8)
PBT 6,992 6,156 13.6 4,696 48.9
Tax (2,268) (2,051) 10.6 (1,845) 22.9
Effective tax rate (%) 32.4 33.3 (88) bps 39.3 (685) bps
Exceptional items - - - 22 -
Adjusted PAT 4,724 4,105 15.1 2,873 64.4
Adj. PAT margin (%) 16.9 15.0 190 bps 10.7 619 bps
Reported PAT 4,724 4,105 15.1 2,873 64.4
Source: Company, India Infoline Research

Revenues up 2.2% qoq, margins flat qoq

Bharti Infratel reported 2.2% qoq rise in revenues led by higher tenancies at both standalone and consolidated level. Standalone tenancy improved to 1.90x from 1.87x in Q3 while co-locations also increased 3.4% qoq (vs est. +0.8% qoq). Site rentals however dipped 1.8% qoq vs our estimate for a 0.5% qoq decline. Within revenues, rent revenues rose 2.3% qoq while energy and other reimbursements increased 1.9% qoq. Indus Towers tenancy too rose to 2.05x from 2.02x in Q3 which led to 0.03x rise in consolidated tenancies. EBIDTA margin remained flat qoq at 41.3% vs our projected 39.9% as higher repair and maintenance costs and other overheads was nullified by lower fuel and rent expenses. 


Key indicators
Bharti Infra consolidated Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14
Towers 79,452 80,656 81,389 82,083 82,321 82,476 82,813 83,368
% qoq 1.5 0.9 0.9 0.3 0.2 0.4 0.7
Co-locations 151,458 154,296 156,336 156,608 158,038 159,997 163,370 167,202
% qoq 1.9 1.3 0.2 0.9 1.2 2.1 2.3
Tenancy 1.90 1.91 1.92 1.91 1.91 1.93 1.96 1.99
Sharing rev per tower pm 63,922 66,287 67,136 66,919 65,222 65,608 66,760 67,942
% qoq 3.7 1.3 (0.3) (2.5) 0.6 1.8 1.8
Sharing rev per operator pm 33,622 34,711 35,022 34,956 34,079 33,996 34,124 34,155
% qoq 3.2 0.9 (0.2) (2.5) (0.2) 0.4 0.1
Bharti Infra standalone Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14
Towers 33,446 34,220 34,668 35,119 35,288 35,376 35,515 35,905
% qoq 2.3 1.3 1.3 0.5 0.2 0.4 1.1
Co-locations 60,714 62,027 63,080 63,573 64,345 65,391 66,871 69,137
% qoq 2.2 1.7 0.8 1.2 1.6 2.3 3.4
Tenancy 1.82 1.81 1.82 1.81 1.82 1.84 1.87 1.90
Sharing rev per tower pm 65,108 66,997 68,345 67,587 67,399 68,720 70,982 71,119
% qoq 2.9 2.0 (1.1) (0.3) 2.0 3.3 0.2
Sharing rev per operator pm 35,870 36,935 37,633 37,241 37,097 37,430 38,046 37,346
% qoq 3.0 1.9 (1.0) (0.4) 0.9 1.6 (1.8)
Indus Towers Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14
Towers 109,539 110,561 111,240 111,819 111,983 112,144 112,615 113,008
% qoq 0.9 0.6 0.5 0.1 0.1 0.4 0.3
Co-locations 216,058 219,687 222,038 221,511 223,078 225,252 229,760 233,488
% qoq 1.7 1.1 (0.2) 0.7 1.0 2.0 1.6
Tenancy 1.96 1.98 1.99 1.99 1.99 2.00 2.02 2.05
Sharing rev per tower pm 59,712 62,559 63,351 62,699 63,717 63,283 63,745 66,001
% qoq 4.8 1.3 (1.0) 1.6 (0.7) 0.7 3.5
Sharing rev per operator pm 30,411 31,600 31,810 31,531 32,075 31,636 31,488 32,145
% qoq 3.9 0.7 (0.9) 1.7 (1.4) (0.5) 2.1
Source: Company, India Infoline Research

PAT up ~15% qoq on higher other income

Infratel PAT beat our estimate of ~Rs4bn and was up 15.1% qoq on the back of higher than expected other income (from investments and profit sale of assets). Company incurred capex of Rs5.6bn (20% of net revenues) vs Rs3.7bn in the previous quarter; for the full year, capex stood at Rs15.3bn, in line with guidance range given by the company. Adjusted fund flow from operations at Rs9.9bn was up 1% qoq. We raise our FY15/16 EBIDTA and PAT estimates based on Q4 results and revise our 9-12mth target to Rs235 (Rs200 earlier) on continued strength in underlying business.  


Financial Summary
Y/e 31 Mar (Rs m) FY13 FY14E FY15E FY16E
Revenues 102,720 108,267 118,368 125,767
yoy growth (%) 8.7 5.4 9.3 6.3
Operating profit 38,302 44,001 49,299 52,870
OPM (%) 37.3 40.6 41.6 42.0
Reported PAT 10,025 15,179 19,819 22,145
yoy growth (%) 33.8 51.4 30.6 11.7
EPS (Rs) 5.3 8.0 10.5 11.7
P/E (x) 40.0 26.4 20.2 18.1
Price/Book (x) 2.3 2.2 2.1 2.0
EV/EBITDA (x) 11.3 9.3 8.0 7.1
Debt/Equity (x) 0.2 0.2 0.2 0.1
RoE (%) 5.8 8.6 10.7 11.4
RoCE (%) 9.6 12.3 14.2 15.6
Source: Company, India Infoline Research

***Note: This is a NSE Chart

 

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