24 April 2020
4QFY20 Results Update | Sector: Telecom
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
307.3 / 4.1
304 / 121
CMP: INR 166
TP: INR 170 (+2% )
Future hinges on uncontrollable levers
Financials & Valuations (INR b)
FY20 FY21E FY22E
143.5 127.4 130.7
57.5 59.5 62.9
31.4 28.8 31.1
EBITDA Margin (%)
40.1 46.7 48.1
Adj. EPS (INR)
17.0 15.6 16.8
EPS Gr. (%)
78.1 76.2 75.6
-0.1 -0.1 -0.1
21.7 20.2 22.1
17.2 16.3 19.1
68.9 111.7 103.6
Div. Yield (%)
FCF Yield (%)
2.4 12.8 15.2
Shareholding pattern (%)
FII Includes depository receipts
Bharti Infratel’s (BHIN) 4QFY20 revenue was broadly in line. LTL EBITDA was
a miss (14%) owing to higher other expenses, mainly due to doubtful debt
provisioning of INR1.93b. Tower addition stood at 1,128 (v/s 823 in
We have cut our FY21/FY22E revenue estimates by 14%/16% due to the
sharp plunge in crude prices and lower rental rates. Subsequently, EBITDA
estimates have been trimmed by a lower quantum of 5% for both years, as
energy margins are a mere 5%.
LTL EBITDA (pre-Ind-AS 116) declines 12% QoQ to INR13b (14% miss)
Proforma consol. revenue at INR35.6b decreased 1.2% QoQ (in-line) due to
decline in Rental/Energy revenues. Rental revenue dipped 1.1% QoQ (2.5%
below est.) to INR21.9b and Energy revenue were 1.2% lower QoQ to
Proforma consol. EBITDA plunged 12.1% QoQ to INR13b (14% miss) on
16.3% QoQ decline in Rental EBITDA to INR12.2b (17.5% miss). On the other
hand, Energy EBITDA grew three-fold to INR815m (v/s our est. of INR307m).
The drop in EBITDA could be attributed to 2.5x increase in other expenses.
EBITDA margin shrank 450bp QoQ to 36.5% (510bp miss) on decline in
Rental EBITDA. While Rental EBITDA margin contracted 980bp to 55%,
Energy EBITDA margin expanded 430bp to 5.9%.
PBT/PAT declined 21% QoQ to INR7.9b/INR5.9b (14% miss).
Net tenancy adds stood at 431 (v/s 744 in 3QFY20) against 1,128 tower
addition (v/s 823 in 3QFY20). We believe that increasing ratio of single
tenancy towers is turning detrimental for capital efficiency and return
Capex for 4QFY20 stood at INR5.6b (INR3.9b in 3QFY20) while operating FCF
stood at INR8.5b.
Highlights from management commentary
Gross tower addition has doubled since last year and is at
a nine-year high. Over the last few years, interest for single tenant towers
has been high, which could reduce returns. However, management is
confident that these towers would be taken by a second tenant in the near
future due to coverage needs of operators.
Rent reduction opportunity:
BHIN is locked into a long-term agreement
with its landlord. However, post-COVID, if an opportunity exists,
management would renegotiate rentals.
will play an important role in higher footfalls areas and is
expected to garner exponential demand with introduction of 5G.
Research Analyst: Aliasgar Shakir
(Aliasgar.Shakir@motilaloswal.com); +91 22 6129 1565
(Suhel.Ahmad@MotilalOswal.com); +91 22 5036 2611;
(Anshul.Aggarwal@motilaloswal.com); +91 22 5036 2511
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
24 April 2020