28 July 2020
1QFY21 Results Update | Sector: Telecom
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Limited impact from lockdown
TP: INR210 (+10%)
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
296 / 121
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
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
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
New growth opportunities:
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:
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
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
146.5 143.6 149.3
73.5 74.6 78.0
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. (%)
73.2 72.5 72.8
-0.1 -0.2 -0.3
23.5 22.9 24.4
21.0 16.6 15.3
65.7 104.4 98.2
10.7 11.5 10.8
Div. Yield (%)
FCF Yield (%)
4.7 15.2 17.6
Highlights from management commentary
Shareholding pattern (%)
FII Includes depository receipts
Research Analyst: Aliasgar Shakir
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P
Investors are advised to refer through important disclosures made at the last page of the Research Report.