United States

Analyst Research Report Snapshot


MOSL: BHARTI AIRTEL (Buy) - Continued improvement in India mobile - Africa margins disappoint




Motilal Oswal Securities Ltd.


31 Jan 2014





Companies referenced:


Available for Immediate Download

Bharti Airtel (BHARTI IN, Mkt Cap USD19.3b, CMP INR302, Buy) Shobhit Khare (Shobhit.Khare@MotilalOswal.com) Bhartis 3QFY14 EBITDA grew 3.8% QoQ and 22.8% YoY to INR 70.9b (est INR70.6b) driven by better-than-expected performance in India mobile and enterprise segments. Proforma PAT increased 193% YoY and 52% QoQ to INR8.3b. Reported PAT of INR6.1b included INR2.2b net loss largely related to tax provision on account of settlement of various disputes. Consolidated revenue grew 13.3% YoY and 2.9% QoQ to INR 219.4b (vs est INR219.8b) driven by QoQ growth across all segments except enterprise and passive infrastructure. India mobile revenue grew 8.8% YoY and 2.6% QoQ to INR116.4b. EBITDA grew 27.3% YoY and 4.5% QoQ to INR39.7b (vs est of INR39.4b). India mobile traffic grew 1.5% QoQ (vs est of 3%); mobile RPM increased 1.8% QoQ to 44.8p (vs est of 44.4p). Voice RPM increased 1% QoQ to 37.1p. Monthly churn declined to 2.7%. Africa EBIDTA remained flat QoQ at USD300m (vs est USD308m) despite 4.1% QoQ revenue growth (1.5% QoQ traffic increase; 2.5% RPM increase). EBITDA margin declined ~110bp QoQ to 25.8% due to increase in SGA, network and access charges. Consolidated net debt declined 6% QoQ to INR576.4b. 3QFY14 capex stood at INR28.2b. Capex guidance for FY14 is USD2b including Indus while FY15 capex guidance is USD2b excluding Indus. While RPM/Profitability improvement thesis for India mobile business is playing out, upcoming spectrum auction would be the key event to watch-out given 1) Participation of Reliance JIO, and 2) Expected crystallization of spectrum payments for Bharti. Our EBITDA estimates are largely unchanged but PAT is downgraded by 17% for FY14 (due to one-offs) and 6-7% for FY15/16 (higher tax rate assumption). We expect 12% consolidated EBITDA CAGR over FY14-16E. At CMP of INR302, the stock trades at proportionate EV/EBITDA of 5.7x FY15E and 4.9x FY16E. Maintain Buy with a revised target price of INR430.

Why buy analyst research?

  • Institutional quality research
  • Available for Immediate Download
  • Detailed company or industry insight
  • Print or save
  • 24 hour customer support
Return to previous page without adding this item to your cart.
Email Customer Support.

About Analyst Research

Analyst research reports are available for immediate download after purchase. You will have unlimited access to the report for 24 hours after purchase, to download, print or save it as many times as you wish. Analyst Research provided by Reuters does not constitute investment advice, and is not endorsed by Reuters Research. This information is protected by copyright and intellectual property laws. More information on Analyst Research.