28 July 2020
1QFY21 Results Update | Sector: Telecom
Bharti Infratel
Neutral
Estimate change
TP change
Rating change
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CMP: INR191
Limited impact from lockdown
TP: INR210 (+10%)
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
BHIN IN
1,897
296 / 121
-23/-14/-31
2109
LTL EBITDA declines 7% QoQ, adjusted for last quarter one-off
Adjusted for a one-off impact in the last quarter, EBITDA declined 7% QoQ.
This was lower than we anticipated, attributable to the Energy margin
turning negative. However, Rental EBITDA reported 10.8% QoQ growth to
INR17.9b.
We increase our FY21/FY22E revenue and EBITDA estimates by 13%/14%
and 26%/24%, respectively, as we shift our model to post-Ind-AS 116.
Excluding the accounting impact, EBITDA estimates are intact, building
1.5%/4.5% growth in FY21/FY22E.
Proforma consol revenue decreased 3.3% QoQ to INR35.1b (6% above est);
Rental revenue declined by 0.4% QoQ (in-line) to INR22.4b. Energy revenue
also declined by 8.1% QoQ to INR12.6b (16% beat); we anticipated it would
be lower due to falling crude prices.
Proforma consol EBITDA increased by 4% QoQ to INR17.7b (4% below est)
on a lower base as the last quarter included an INR1.93b one-time provision.
Adjusting for the same, EBITDA declined 7% QoQ. EBITDA was lower than
our estimate as our expenses factored higher decline in crude prices.
Rental EBITDA grew 11% to INR17.9b (in-line). Energy EBITDA turned to loss
of INR253m v/s INR815m profit in 4QFY20 (est: INR406m profit).
The EBITDA margin expanded 360bp QoQ to 50.4% (contracted 60bp YoY).
This was led by improvement in Rental EBITDA, which increased 840bp to
81.5% due to the last quarter’s abnormally low EBITDA.
PBT/PAT was up by 9%/8% QoQ to INR9.4b/INR7b (5%/8% below estimate).
Capex stood at INR1.9b for 1QFY21 (INR5.3b in 4QFY20), much lower due to
the lockdown; 429 towers were added in 1QFY21, taking the total count to
95,801.
Consol net tenancy dropped by 365 to 1,74,216 (est: 1,044 adds) v/s the
addition of 431 in 4QFY20. On the other hand, gross co-location exits
dropped QoQ to 1,228 v/s 2,067 in 4QFY20. Additionally, gross adds fell to
863 v/s 2,498 in 4QFY20. The average sharing factor stood at 1.82x v/s 1.84x
in 4QFY20.
New growth opportunities:
The
WFH model being the new norm would
open up demand for new technologies such as 5G, and BHIN is equipped and
well-placed to exploit them.
Increase in receivables and lower exit charges:
Management allayed
concerns of an increase in receivables, which should be considered in
conjunction with unbilled revenues (which have seen only a marginal
increase). The shortfall of INR580m in exit charges is attributable to delay in
payments.
Energy margin:
This was seasonally down in the first quarter. Furthermore,
some contracts were up for renewal, and operators chose to move to a pass-
through model that could reduce the Energy margin to 0–3% from 3–5%.
352.4 / 4.8
Financials & Valuations (INR b)
FY20 FY21E FY22E
Y/E March
Sales
146.5 143.6 149.3
EBITDA
73.5 74.6 78.0
Adj. PAT
33.0 30.8 32.8
EBITDA Margin (%)
50.2 52.0 52.2
Adj. EPS (INR)
17.8 16.7 17.7
EPS Gr. (%)
31.1 -6.5
6.3
BV/Sh. (INR)
73.2 72.5 72.8
Ratios
Net D:E
-0.1 -0.2 -0.3
RoE (%)
23.5 22.9 24.4
RoCE (%)
21.0 16.6 15.3
Payout (%)
65.7 104.4 98.2
Valuations
EV/EBITDA (x)
4.6
4.4
4.0
P/E (x)
10.7 11.5 10.8
P/BV (x)
2.6
2.6
2.6
Div. Yield (%)
5.3
7.8
7.8
FCF Yield (%)
4.7 15.2 17.6
Highlights from management commentary
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-20 Mar-20
53.5
53.5
4.9
3.6
40.6
42.1
1.0
0.8
Jun-19
53.5
1.7
43.8
1.0
FII Includes depository receipts
Research Analyst: Aliasgar Shakir
(Aliasgar.Shakir@motilaloswal.com)
Suhel Shaikh
(Suhel.Ahmad@MotilalOswal.com) /
Anshul Aggarwal
(Anshul.Aggarwal@motilaloswal.com)
3 September
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P
1
Capital.
Motilal Oswal
2019
Investors are advised to refer through important disclosures made at the last page of the Research Report.