X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Bharti Infratel: A good start to FY16 - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Bharti Infratel: A good start to FY16
Aug 10, 2015

Bharti Infratel has declared its results for the first quarter of FY16. The company has reported a 6.1% YoY increase in revenues and a 24.4% YoY increase in net profits during the quarter. Here is our analysis of the results.

Performance summary
  • Consolidated sales grew by 6.1% YoY during the first quarter of FY16.
  • The company's operating performance continues to improve. The operating margin improved from 41.5% in 1QFY15 to 43% in 1QFY16. The operating profit increased by 10% YoY.
  • The good operating performance, a 15.2% YoY decline in interest costs and an 84.1% YoY increase in other income contributed to an increase of 24.4% YoY in the net profit by during the quarter.
  • Total towers on a consolidated basis stood at 86,397 at the end of the quarter. Total co-locations stood at 185,215. Average sharing factor improved by 5.6% YoY. Sharing revenue per tower increased by 5.9% YoY during the quarter.

Consolidated financial performance snapshot
(Rs m) 1QFY15 1QFY16 Change
Sales 28,427 30,157 6.1%
Expenditure 16,637 17,186 3.3%
Operating profit (EBITDA) 11,790 12,971 10.0%
Operating profit margin (%) 41.5% 43.0%  
Other income 1,172 2,158 84.1%
Finance costs 784 665 -15.2%
Depreciation 5,253 5,571 6.1%
Exceptional items - -  
Profit before tax 6,925 8,893 28.4%
Tax 2,297 3,136 36.5%
Profit after tax/(loss) 4,628 5,757 24.4%
Net profit margin (%) 16.3% 19.1%  
No. of shares   1,896.3  
Diluted Earnings per share (Rs)*   11.1  
P/E ratio (x)*   40.0  
* On a trailing 12 months basis

What has driven performance in 1QFY16?
  • Bharti Infratel reported a revenue growth of 6.1% YoY during the quarter. This was achieved by the growth in number of towers as well as an improvement in the tenancy ratio during the quarter.

  • The average sharing factor (or tenancy ratio) improved to 2.13 in 1QFY16 as compared to 2.02 in 1QFY15. Even on a sequential basis, the factor saw an increase of 1%. The sharing revenue per tower increased by 5.9% YoY. The sharing revenue per customer increased by 0.6% YoY.

    Key Indicators (Consolidated)
      1QFY15 1QFY16 Change 4QFY15 QoQ Change
    Total Towers (Nos.) 83,778 86,397 3.1% 85,892 0.6%
    Total Co-locations (Nos.) 170,320 185,215 8.7% 182,294 1.6%
    Average sharing factor  2.02 2.13 5.6% 2.11 1.0%
    Sharing revenue per tower per month (Rs) 68,886 72,955 5.9% 71,828 1.6%
    Sharing revenue per sharing operator (Rs) 34,113 34,201 0.3% 34,011 0.6%

  • Bharti Infratel's operating margins stood at 43% during 1QFY16, which was higher than the 41.5% seen during the same period last year. This was largely on account of significant savings fuel costs and maintenance expenses (as a percentage of ales) during the quarter.

    Cost Breakdown
      1QFY15 As % of sales 1QFY16 As % of sales
    Power & fuel 10,566 37.2% 10,733 35.6%
    Rent 2,255 7.9% 2,556 8.5%
    Employee related expenses 973 3.4% 1,017 3.4%
    Repairs & maintenance 2,260 8.0% 2,296 7.6%
    SG&A 583 2.1% 584 1.9%
    Total expenses 16,637   17,186  

  • Net profits increased by 24.4% YoY during the quarter. The higher operating margins as well as a 15.2% YoY decline in interest costs and an 84.1% YoY increase in other income, contributed to the growth in the bottomline. The net margin improved from 16.3% in 1QFY15 to 19.1% in 1QFY16.
What to expect?
At the current price of Rs 444, the stock is trading at a multiple of 40 times its trailing twelve months earnings.

Bharti Infratel has continued the growth momentum in the first quarter of FY16. Although, revenue growth operating profit growth may both slow down a bit going forward, we don't foresee any hiccups in the short term. The management remains confident that the huge growth in data consumption in the country will eventually translate into higher demand for additional towers as well as increased tenancies.

The company still has room to improve operating margins a little more. However, the big jump in this quarter was seen in the other income as the company has moved to the latest accounting standard which requires treasury gains to be recognised as and when they are received.

The management has started the process of listing the company's shares on the American stock exchanges via the ARD route. There will be no equity dilution due to this move. The parent company Bharti Airtel has also moved in the same direction.

The company continues to gain incremental market share and the huge cash balance on its books is a source of comfort. The total cash and liquid investments as on 30 June 2015 stands at a little over Rs 43 bn. This will enable the company to continue its capex investments in the future. The company's operating free cash flow continues to grow strongly. In 1QFY16 it grew by 21% YoY. There was no update on the buyback proposal. The management also stated that inorganic growth options were being considered but there was nothing concrete as of now.

The long term fundamentals of Bharti Infratel remain strong. However, the current valuations offer no margin of safety. We maintain our view that investors should wait for better valuations to buy the stock.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

BHARTI INFRATEL SHARE PRICE


Dec 12, 2017 09:57 AM

TRACK BHARTI INFRATEL

  • Track your investment in BHARTI INFRATEL with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON BHARTI INFRATEL

BHARTI INFRATEL - CHINA MOBILE COMPARISON

COMPARE BHARTI INFRATEL WITH

MARKET STATS