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RESULTS REVIEW 4QFY19 25 APR 2019

Bharti Infratel NEUTRAL

Growth conundrumBharti Infratel’s (BHIN) 4QFY19 results were in-line but weak operationally. This was on account of tenancy decline of 1% QoQ. We downgrade BHIN to Neutral with TP of Rs 273 @ 20x FY21E EPS (vs. Rs 354 earlier @ 25x). Our multiple downgrade is driven by risk of incremental tenancy loss from VIL and long term risk of rental renegotiations by customers. HIGHLIGHTS OF THE QUARTER BHIN reported revenues of Rs 36bn (-1.7% YoY, -1.1%

QoQ). Rental revenue stood at Rs 21.1bn (-3.5% YoY, +0.6% QoQ) including ~Rs 1bn of exit penalties from VIL (incremental ~Rs 450mn QoQ).

Net tenant’s decline QoQ by 1,725. VIL besides exit of ~70k overlapping tenancies has guided for additional reduction of ~20-25k towers. We believe this is playing out and may hamper FY20 tenancies. We have thus reduced our target PE multiple from 25x to 20x. Incremental tenancy demand is still subdued (mostly loading) despite robust data usage growth.

BHIN is yet to see the impact of 4,308 tenants (~2,540 in 3Q) churn on financials as it has received termination notices but services continue.

EBITDA was at Rs 14.9bn (-6.4/-0.9% YoY/QoQ). Excluding exit penalties, EBITDA decline would be 12.5% YoY. Despite YoY decline of 16% in tenancies and

high operating leverage in business, modest EBITDA decline is positive.

PAT was flat YoY at Rs 6.1bn. PAT would have declined by 16% YoY but for exit penalties.

BHIN declared a second interim dividend of Rs 7.5 and total Rs 15 in FY19, dividend yield of 5%.

Near term outlook is feeble with weak new tenants’ addition and risk of further tenancy loss from VIL.

STANCE Merger of Indus and consequent savings in DDT (~Rs 5bn) and healthy dividend yield (~5%) are key positives. Tenancy growth is key re-rating trigger. Tariff increase by telcos may accelerate future rollout and act as catalyst for higher than expected tenancy increase.

That said, tenancy reduction (~20-25k) by VIL as per their guidance is key risk. Tower offerings by Jio/ATC for co-location are additional risk. We presume ATC has sizeable tower portfolio but limited tenants as it anchor customer (Tata Tele) has shut business.

Pricing renegotiations by telcos remains key long-term risk. We foresee this playing out gradually post the stake sale by promoters and mostly from FY22 as large portfolio comes up for renewal.

Consolidated Financial Summary (BHIN + 42% of Indus) (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) FY17 FY18 FY19 FY20E FY21E Net Sales 21,086 20,962 0.6 21,857 (3.5) 134,236 144,896 145,823 146,009 149,583 EBITDA 2,028 2,021 0.3 2,179 (6.9) 58,969 63,801 60,012 56,644 56,843 APAT 6,076 6,484 (6.3) 6,060 0.3 27,470 25,437 25,295 25,494 26,087 Diluted EPS (Rs) 3.3 3.5 (6.3) 3.3 0.3 14.9 13.8 13.7 13.8 14.1 P/E (x) 18.2 19.7 19.8 19.7 19.2 EV / EBITDA (x) 7.5 7.2 8.0 8.4 8.2 RoE (%) 16.3 15.7 16.1 17.6 17.9 Source: Company, HDFC sec Inst Research

INDUSTRY TELECOM CMP (as on 25 Apr 2019) Rs 271 Target Price Rs 273 Nifty 11,642

Sensex 38,731

KEY STOCK DATA

Bloomberg BHIN IN

No. of Shares (mn) 1,850

MCap (Rs bn) / ($ mn) 501/7,134

6m avg traded value (Rs mn) 1,713

STOCK PERFORMANCE (%)

52 Week high / low Rs 339/242

3M 6M 12M

Absolute (%) (3.1) 2.2 (16.7)

Relative (%) (10.7) (12.7) (29.0)

SHAREHOLDING PATTERN (%)

Dec-18 Mar-19

Promoters 53.5 53.5

FIs & Local MFs 2.0 1.6

FPIs 43.4 43.9

Public & Others 1.1 1.0

Pledged Shares* - -

Source : BSE, * % of total

Himanshu Shah himanshu.shah@hdfcsec.com +91-22-6171-7315

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Quarterly Financial Snapshot: Consolidated (BHIN + 42% of Indus)(Rs mn) 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 YoY (%) QoQ (%) Rental income 21,857 21,989 21,201 20,962 21,086 (3.5) 0.6 Energy and other reimbursements 14,765 14,746 15,482 15,440 14,917 1.0 (3.4) Net Sales 36,622 36,735 36,683 36,402 36,003 (1.7) (1.1) Power and fuel 13,148 14,204 14,367 14,184 13,281 1.0 (6.4) Rent 3,230 3,206 3,168 3,050 3,127 (3.2) 2.5 Employee benefits expenses 1,269 1,229 1,222 1,242 1,221 (3.8) (1.7) R&M expenses 2,179 2,215 2,139 2,021 2,028 (6.9) 0.3 Other expenses 873 685 923 864 1,435 64.4 66.1 Total Operating Expenses 20,699 21,539 21,819 21,361 21,092 1.9 (1.3) EBITDA 15,923 15,196 14,864 15,041 14,911 (6.4) (0.9) EBITDA ex energy 14,306 14,654 13,749 13,785 13,275 (7.2) (3.7) Depreciation 5,721 5,389 5,625 5,727 5,498 (3.9) (4.0) EBIT 10,202 9,807 9,239 9,314 9,413 (7.7) 1.1 Other Income 956 609 557 460 408 (57.3) (11.3) Finance costs/(income) 129 (285) (442) (601) (243) (288.4) (59.6) PBT 11,029 10,701 10,238 10,375 10,064 (8.7) (3.0) Tax 4,469 4,321 3,883 3,891 3,988 (10.8) 2.5 Xo 500 - 357 - - RPAT 6,060 6,380 5,998 6,484 6,076 0.3 (6.3) Energy spread 1,617 542 1,115 1,256 1,636 1.2 30.3 Source: Company, HDFC sec Inst Research

Margin Analysis (%)

As % of Net Sales 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 YoY (bps) QoQ (bps) Power and fuel 35.9 38.7 39.2 39.0 36.9 99 (208) Rent 8.8 8.7 8.6 8.4 8.7 (13) 31 Employee benefits expenses 3.5 3.3 3.3 3.4 3.4 (7) (2) R&M expenses 5.9 6.0 5.8 5.6 5.6 (32) 8 Other expenses 2.4 1.9 2.5 2.4 4.0 160 161 Total Opex 56.5 58.6 59.5 58.7 58.6 206 (10) EBITDA Margin 43.5 41.4 40.5 41.3 41.4 (206) 10 EBITDA Margin ex energy 65.5 66.6 64.9 65.8 63.0 (250) (281) EBIT Margin 27.9 26.7 25.2 25.6 26.1 (171) 56 RPAT Margin 16.5 17.4 16.4 17.8 16.9 33 (94) Energy Spread 11.0 3.7 7.2 8.1 11.0 2 283 Tax Rate 40.5 40.4 37.9 37.5 39.6 (89) 212 Source: Company, HDFC sec Inst Research *Energy spread = (energy revenue less power & fuel costs)/ energy revenue

Decline in rental revenue and EBITDA is due to 16% decline in tenancies YoY owing to Voda-Idea merger Increase in other expenses is on account of higher charity and donation costs YoY by ~Rs 300mn Increase in energy spread QoQ is due to seasonality

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Operating KPIs

4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 YoY (%) QoQ (%) No. of towers Bharti Infratel (consolidated)* 91,451 91,759 92,123 92,301 92,277 0.9 (0.0) Bharti Infratel (standalone) 39,523 39,719 39,946 40,192 40,388 2.2 0.5 Indus Towers 123,639 123,904 124,230 124,069 123,546 (0.1) (0.4) Number of tenants Bharti Infratel (consolidated) 205,596 200,778 174,512 174,449 172,724 (16.0) (1.0) Bharti Infratel (standalone) 88,665 86,053 78,275 77,693 76,341 (13.9) (1.7) Indus Towers 278,408 273,154 229,136 230,372 229,483 (17.6) (0.4) Net tenants added Bharti Infratel (consolidated) (7,880) (4,819) (26,266) (63) (1,725) Bharti Infratel (standalone) (3,546) (2,612) (7,778) (582) (1,352) Indus Towers (10,319) (5,254) (44,018) 1,236 (889) Tenants Churn Bharti Infratel (consolidated) 9,813 5,657 27,769 2,540 3,786 Bharti Infratel (standalone) 3,956 2,954 8,215 1,510 1,940 Indus Towers 13,945 6,436 46,557 2,452 4,395 Gross tenants added Bharti Infratel (consolidated) 1,933 838 1,503 2,477 2,060 Bharti Infratel (standalone) 410 342 437 928 588 Indus Towers 3,626 1,182 2,539 3,688 3,506 Average sharing factor Bharti Infratel (consolidated) 2.297 2.218 2.041 1.890 1.881 (18.1) (0.5) Bharti Infratel (standalone) 2.293 2.205 2.063 1.946 1.912 (16.6) (1.8) Indus Towers 2.300 2.228 2.024 1.851 1.857 (19.2) 0.4 Sharing rev./sharing tower/month (Rs) Bharti Infratel (consolidated) 79,861 80,014 76,865 75,775 76,159 (4.6) 0.5 Bharti Infratel (standalone) 83,716 84,316 82,621 83,040 82,460 (1.5) (0.7) Indus Towers 76,874 76,729 72,477 70,237 71,283 (7.3) 1.5 Sharing rev./sharing operator/month (Rs) Bharti Infratel (consolidated) 34,110 35,276 36,599 39,266 39,680 16.3 1.1 Bharti Infratel (standalone) 36,511 37,281 38,687 41,632 42,143 15.4 1.2 Indus Towers 32,741 33,753 34,961 37,354 37,716 15.2 1.0 Source: Company, HDFC sec Inst Research; Bharti Infratel Consolidated is 42% including proportionate share in Indus

YoY decline in tenancies is owing to VIL merger as overlapping tenancies of both the companies is considered as one now Tenancies growth to be led by (a) moderation in churn post VIL merger (b) expansion by incumbents led by strong data usage growth and (c) fund infusion. With 2x the BTS/tower for Bharti, 4G loading on existing towers is nearing to an end Increase in rental/tenant is owing to (a) loading charges on overlapping tenancies of VIL and (b) increase in rental for surviving tenants

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Key Model Assumptions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E Towers BHIN standalone 35,119 35,905 37,196 38,458 39,099 39,523 40,388 41,339 42,378 Indus 111,819 113,008 115,942 119,881 122,730 123,639 123,546 123,194 123,069 BHIN + 100% Indus 146,938 148,913 153,138 158,339 161,829 163,162 163,934 164,533 165,447 Net Additions-Towers BHIN standalone 1,972 786 1,291 1,262 641 424 865 951 1,040 Indus 2,494 1,189 2,934 3,939 2,849 909 (93) (352) (125) BHIN + 100% Indus 4,466 1,975 4,225 5,201 3,490 1,333 772 599 914 Tenancies BHIN standalone 63,573 69,137 75,819 81,632 89,263 88,665 76,341 74,195 73,982 Indus 221,511 233,488 253,513 270,006 288,913 278,408 229,483 232,926 241,492 BHIN + 100% Indus 285,084 302,625 329,332 351,638 378,176 367,073 305,824 307,121 315,475 % chg YoY BHIN standalone 5.7 8.8 9.7 7.7 9.3 (0.7) (13.9) (2.8) (0.3) Indus 3.7 5.4 8.6 6.5 7.0 (3.6) (17.6) 1.5 3.7 BHIN + 100% Indus 4.1 6.2 8.8 6.8 7.5 (2.9) (16.7) 0.4 2.7 Net Additions-Tenancies BHIN standalone 3,413 5,564 6,682 5,813 7,631 (598) (12,324) (2,146) (212) Indus 7,826 11,977 20,025 16,493 18,907 (10,505) (48,925) 3,443 8,566 BHIN + 100% Indus 11,239 17,541 26,707 22,306 26,538 (11,103) (61,249) 1,297 8,354 Closing Tenancy BHIN standalone (x) 1.81 1.93 2.04 2.12 2.28 2.24 1.89 1.79 1.75 Indus (x) 1.98 2.07 2.19 2.25 2.35 2.25 1.86 1.89 1.96 BHIN + 100% Indus 1.94 2.03 2.15 2.22 2.34 2.25 1.87 1.87 1.91 Sharing revenue/tenant (Rs/month) BHIN standalone 37,191 37,135 36,911 37,037 37,029 38,143 40,245 42,470 43,191 Indus 31,520 31,683 32,086 32,682 32,914 34,256 35,467 38,045 38,664 BHIN + 100% Indus 32,727 32,914 33,193 33,689 33,877 35,184 36,639 39,132 39,742 Sharing revenue/tower (Rs/month) BHIN standalone 66,995 69,387 73,193 77,080 81,592 86,320 83,101 78,228 76,447 Indus 62,036 64,118 68,250 72,553 75,825 78,882 72,875 71,299 74,485 BHIN + 100% Indus 63,206 65,383 69,446 73,653 77,222 80,682 75,373 73,023 74,983 Rental Revenue (Rs Mn) BHIN standalone (x) 27,441 29,569 32,103 34,989 37,968 40,720 39,844 38,360 38,399 Indus (x) 82,313 86,493 93,755 102,658 110,376 116,605 108,081 105,555 110,058 BHIN + 100% Indus 109,754 116,062 125,858 137,647 148,344 157,325 147,925 143,914 148,457

Modest tenancy addition in FY20E is due to potential exit by VIL of ~22k additional tenancies

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E EBITDA (ex-energy) (Rs Mn) BHIN standalone 17,501 19,969 21,997 24,123 26,516 28,913 28,014 26,262 25,818 Indus 47,057 52,905 58,576 65,170 69,229 72,519 65,355 61,868 64,624 BHIN + 100% Indus 64,558 72,874 80,573 89,293 95,745 101,432 93,369 88,129 90,441 EBITDA Margin % BHIN standalone 63.8 67.5 68.5 68.9 69.8 71.0 70.3 68.5 67.2 Indus 57.2 61.2 62.5 63.5 62.7 62.2 60.5 58.6 58.7 BHIN + 100% Indus 58.8 62.8 64.0 64.9 64.5 64.5 63.1 61.2 60.9 Energy EBITDA (Rs Mn) BHIN standalone (x) 2,126 1,562 1,943 936 1,736 2,647 3,134 2,773 2,402 Indus (x) (3,020) 702 3,641 3,990 3,907 4,245 3,369 3,870 3,528 BHIN + 100% Indus (895) 2,264 5,583 4,926 5,643 6,892 6,503 6,643 5,930 EBITDA (incl energy) (Rs Mn) BHIN standalone (x) 19,627 21,531 23,940 25,059 28,252 31,560 31,148 29,035 28,220 Indus (x) 44,037 53,606 62,217 69,160 73,136 76,764 68,724 65,738 68,152 BHIN + 100% Indus 63,663 75,138 86,157 94,219 101,388 108,324 99,872 94,772 96,372 APAT (Rs Mn) BHIN Standalone (RPAT) 11,974 11,574 27,252 13,687 27,047 24,399 27,337 15,729 15,674 (-) Dividend from Indus 4,050 2,200 16,407 - 9,510 10,010 11,261 - - BHIN Standalone (APAT) 7,924 9,374 10,845 13,687 17,537 14,389 16,076 15,729 15,674 Indus PAT (4,632) 8,690 21,933 27,219 28,454 31,643 25,420 23,251 24,793 (-) DDT 1,929 1,048 7,813 - 4,664 4,910 5,523 - - Indus Adjusted PAT (6,561) 7,643 14,120 27,219 23,790 26,734 19,897 23,251 24,793 Interest net of tax (Rs Mn) 4,137 4,137 BHIN (APAT) + 100% Indus (RPAT) 3,291 18,065 32,778 40,906 45,991 46,032 41,496 34,842 36,330 BHIN (APAT) + 100% Indus (APAT) 1,363 17,017 24,965 40,906 41,327 41,123 35,973 34,842 36,330 Source: Company, HDFC Sec Inst Research *Interest (net of tax) on Idea + Providence stake acquisition payout of ~Rs 65bn @ 9.5%

We have assumed Energy EBITDA to decline as the FY18 energy spread at 8% is significantly higher than the management’s guidance of 5-7% Further led by pressure on customer’s core business we expect them to renegotiate on energy

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Valuation Snapshot: BHIN + 100% of Indus

A B C D Target PE multiple (X) 15.0 20.0 25.0 30.0 Base case FY21E PAT (Rs Mn) 36,330 36,330 36,330 36,330 Target Mcap(Rs Mn) 544,949 726,598 908,248 1,089,897 O/s shares (Mn) 2,661 2,661 2,661 2,661 TP before incorporating decline in rental/tenant (Rs) 205 273 341 410 Impact on TP of 5% decline in rental/tenant (27) (36) (45) (54) TP after incorporating decline in rental/tenant 178 237 296 356 Source: Company, HDFC sec Inst Research

Sensitivity of EPS and TP to 5% change in rental/tenant Avg Rental/tenant/month (BHIN Consol) (Rs) 39,000 Avg tenancy (Nos) 305,000 EBITDA impact of 5% reduction in rentals (Rs mn) 7,137 PAT impact of 5% reduction in rentals (Rs mn) 4,782 % of FY19 Consol PAT 13.8% EPS impact of 5% reduction in rentals on Consol EPS (Rs) 1.8 A B C D Target PE multiple (X) 15.0 20.0 25.0 30.0 Value per share impact (Rs) 27 36 45 54 Source: HDFC sec Inst Research

We have assumed Idea to opt for its entire 11.15% and Providence for its 3.35% out of 4.85% holding in Indus for Cash to arrive at outstanding shares of the merged entity Accordingly we have taken the O/s shares of BHIN at 2,661mn shares for TP derivation Pricing renegotiations by telcos of largest costs remains a key long-term risk. Jio has considerable network costs advantage vs. incumbents. BHIN runs risk over here. We haven’t factored the same in our TP

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Change in estimates BHIN + 100% of Indus

Rs Mn New Old Change

FY20E FY21E FY20E FY21E FY20E FY21E Revenue 143,914 148,457 145,355 149,149 (1.0) (0.5) EBITDA 94,772 96,372 95,902 97,012 (1.2) (0.7) EBITDA Margin % 65.9 64.9 66.0 65.0 (15) (8) PAT 34,842 36,330 36,236 36,710 (3.8) (1.0) Source: HDFC sec Inst Research Peer Set Comparison

COMPANY Mcap (Rs bn)

CMP (Rs) RECO TP

(Rs) EPS (Rs/sh) EV/EBITDA (x) RoE (%)

FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E Bharti Airtel 1,682.6 328 BUY 370 (2.5) (6.6) (0.8) 11.3 9.7 8.2 (1.5) (4.2) (0.4) Bharti Infratel 501.1 271 NEU 273 13.7 13.8 14.1 8.0 8.4 8.2 16.1 17.6 17.9 Idea Cellular 482.3 17 BUY 20 (18.9) (6.2) (3.8) 46.8 15.1 9.5 NA NA NA Source: HDFC sec Inst Research

Decrease in estimates to factor higher than estimated tenancy loss

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Consolidated Income Statement (BHIN Standalone + 42% of Indus) (Rs mn) FY17 FY18 FY19 FY20E FY21E

Rental revenue 84,326 89,694 85,238 82,693 84,624

Energy reimbursements 49,910 55,202 60,585 63,317 64,959

Net Sales 134,236 144,896 145,823 146,009 149,583

Growth (%) 8.9 7.9 0.6 0.1 2.4

Energy costs 46,533 50,772 56,036 58,918 61,075

Lease rentals 11,628 12,615 12,551 12,832 13,345

Employee costs 4,678 5,002 4,914 5,025 5,226

Other expenses 12,428 12,706 12,310 12,590 13,093

Total Operating Cost 75,267 81,095 85,811 89,365 92,740

EBIDTA 58,969 63,801 60,012 56,644 56,843

EBIDTA Margin (%) 43.9 44.0 41.2 38.8 38.0 EBIDTA Margin excl energy cost (%) 69.9 71.1 70.4 68.5 67.2

EBIDTA Growth (%) 9.0 8.2 (5.9) (5.6) 0.4

Depreciation 22,625 23,462 22,239 22,262 22,300

EBIT 36,344 40,339 37,773 34,382 34,544

Interest costs (4,413) (97) (1,571) (2,173) (2,765)

Other income 1,456 2,326 2,034 2,072 2,217

PBT 42,212 42,762 41,378 38,627 39,526

Tax 14,742 17,325 16,083 13,133 13,439

APAT 27,470 25,437 25,295 25,494 26,087

EPS 14.9 13.8 13.7 13.8 14.1

EPS Growth (%) 22.2 (7.4) (0.6) 0.8 2.3 Source: Company, HDFC sec Inst Research

Consolidated Balance Sheet (Rs mn) FY17 FY18 FY19 FY20E FY21E

SOURCES OF FUNDS Share Capital 18,496 18,496 18,496 18,496 18,496

Reserves 136,369 151,048 126,749 125,522 129,409

Total Shareholders Funds 154,865 169,544 145,245 144,018 147,905

Long Term Debt 4,447 9,515 10,464 11,530 11,420

Current portion of LT Debt 12,903 19,069 23,895 23,310 23,398

Total Debt 17,350 28,584 34,359 34,840 34,818

Non-current liabilities 21,408 16,286 15,948 17,263 18,686

TOTAL SOURCES OF FUNDS 193,623 214,414 195,552 196,121 201,409

APPLICATION OF FUNDS Net Fixed Assets 138,894 134,806 128,356 120,978 113,911

Other non-current assets 11,847 6,968 6,539 7,078 7,661

Trade Receivables 2,179 9,185 14,883 16,110 17,438

Cash & Equivalents 79,181 73,333 54,332 61,218 72,426

Other Current Assets 14,727 15,571 18,386 19,902 21,542

Current Assets 96,087 98,089 87,601 97,229 111,406

Trade Payables 6,890 18,580 20,991 22,721 24,594

Other CL & Provisions 46,315 6,869 5,953 6,444 6,975

Current Liabilities 53,205 25,449 26,944 29,165 31,569

Net current Assets 42,882 72,640 60,657 68,064 79,837

TOTAL APPLICATION OF FUNDS 193,623 214,414 195,552 196,121 201,409 Source: Company, HDFC sec Inst Research

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Consolidated Cash Flow Year ending March (Rs mn) FY17 FY18 FY19 FY20E FY21E Reported PAT 27,470 25,437 25,295 25,494 26,087 Depreciation 22,625 23,462 22,239 22,262 22,300 Interest (4,413) (97) (1,571) (2,173) (2,765) Working Capital Change (1,650) (10,736) (24,549) (521) (564) OPERATING CASH FLOW ( a ) 44,033 38,066 21,414 45,062 45,058 Capex (19,499) (19,374) (15,789) (14,885) (15,232) Free Cash Flow 24,533 18,692 5,625 30,177 29,825 Investments & Others (531) (243) 91 776 (307) INVESTING CASH FLOW ( b ) (20,030) (19,617) (15,698) (14,109) (15,540) Capital Issuance 6,404 4,453 1,338 0 1,147 Debt Issuance 304 11,234 5,775 481 (22) Interest 4,413 97 1,571 2,173 2,765 Dividend & others (33,401) (40,081) (33,401) (26,721) (22,200) FINANCING CASH FLOW ( c ) (22,280) (24,297) (24,717) (24,067) (18,310) NET CASH FLOW (a+b+c) 1,722 (5,848) (19,001) 6,886 11,208 Closing C&CE 79,181 73,333 54,332 61,218 72,426

Source: Company, HDFC sec Inst Research

Key Ratios FY17 FY18 FY19 FY20E FY21E PROFITABILITY (%) EBITDA Margin 43.9 44.0 41.2 38.8 38.0 EBITDA Margin excl energy cost 69.9 71.1 70.4 68.5 67.2 EBIT Margin excl energy cost 43.1 45.0 44.3 41.6 40.8 APAT Margin excl energy cost 32.6 28.4 29.7 30.8 30.8 RoE 16.3 15.7 16.1 17.6 17.9 RoIC 18.3 18.8 16.4 16.4 17.3 RoCE 11.4 11.8 11.3 11.6 11.5 EFFICIENCY

Tax Rate (%) 34.9 40.5 38.9 34.0 34.0 Asset Turnover (x) 0.7 0.7 0.7 0.7 0.7 Debtors (days) 6 23 37 40 43 Payables (days) 19 47 53 57 60 Cash Conversion Cycle (days) (13) (24) (15) (17) (17) Net Debt/EBITDA (x) (1.0) (0.7) (0.3) (0.5) (0.7) Net D/E (0.4) (0.3) (0.1) (0.2) (0.3) Interest Coverage (8.2) (415.9) (24.0) (15.8) (12.5) PER SHARE DATA

EPS (Rs/sh) 14.9 13.8 13.7 13.8 14.1 CEPS (Rs/sh) 27.1 26.4 25.7 25.8 26.2 DPS (Rs/sh) 15.0 18.0 15.0 12.0 12.0 BV (Rs/sh) 83.7 91.7 78.5 77.9 80.0 VALUATION

P/E 18.2 19.7 19.8 19.7 19.2 P/BV 3.2 3.0 3.5 3.5 3.4 EV/EBITDA 7.5 7.2 8.0 8.4 8.2 OCF/EV (%) 15.9 2.3 7.7 9.2 9.4 FCF/EV (%) 11.0 (1.6) 4.3 6.1 6.7 FCFE/Mcap (%) 12.3 (1.1) 5.1 7.0 7.7 Dividend Yield (%) 5.5 6.6 5.5 4.4 4.4 EV/Revenues 5.2 5.1 5.6 5.7 5.5 Source: Company, HDFC sec Inst Research

BHARTI INFRATEL : RESULTS REVIEW 4QFY19

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Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 13-Apr-18 337 SELL 280 25-Apr-18 325 NEU 312 6-Jul-18 339 SELL 280

27-Jul-18 286 NEU 306 9-Oct-18 268 BUY 306

25-Oct-18 265 BUY 321 9-Jan-19 298 BUY 345

24-Jan-19 263 BUY 344 10-Apr-19 315 BUY 354 25-Apr-19 271 NEU 273

RECOMMENDATION HISTORY

200220240260280300320340360380400

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug -

18

Sep-

18

Oct

-18

Nov-

18

Dec-

18

Jan-

19

Feb-

19

Mar

-19

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19

Bharti Infratel TP

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