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Tulip Telecom- On expected lines…
Tulip Telecom reported its Q3FY11 results, which were in line with our
estimates. The topline stood at | 602.2 crore, growing 20.2% YoY and
2.9% QoQ. The EBITDA margin stood at 28.5% while the company
reported EBITDA of | 171.6 crore against our expectation of | 167.8
crore. EBITDA margins improved 154 bps YoY, primarily on account of
increasing share of the business of fibre optic. PAT stood at | 81.7 crore
(I-direct estimate of | 81.1 crore).
Highlights of the quarter
The revenue growth was driven on the back of higher growth on the
fibre network and conventional wireless business segment. The
company added a few major clients on its network during Q3FY11
that include the Apeejay group, Bhel, Berger, 3i infotech, Orissa
Mining Corporation and HCL Infosystems.
The company entered into a network-to-network interconnection
and joint marketing arrangement with Hutchison Global
Communications. The companies would be able to use each others
network to provide IP VPN services. Tulip Telecom would focus on
providing services to Indian enterprises having offices abroad.
Valuation
The management has taken several initiatives to increase the dependence
on fibre optic. Commissioning of the newly acquired data centre facility
would provide a further push to revenues. The management expects
about 20% and 65% of future revenue to come from the data centre and
connectivity business, respectively, going forward. At the current market
price of | 168, the stock is trading at 9.6x FY11E diluted EPS of | 17.5 and
8.1x FY12E diluted EPS of | 20.8. We have valued the stock at 10x FY12E
EPS and arrived at a target price of | 208. This implies an upside of 23%.
We have rated the stock as STRONG BUY.
Data centre
Tulip Telecom has acquired the data centre facility spread across 9
lakh sq ft for | 230 crore in this quarter. The company expects to
invest another | 300 crore by bringing in private equity/strategic
investor. It is also in talks with several vendors to design the data
centre. The company is looking to sell 25,000 sq feet of capacity
within the next six to nine months.
Outlook
Tulip Telecom’s numbers were in line with our expectations. The
management has taken several initiatives to increase the dependence on
fibre optic. Commissioning of the newly acquired data centre facility
would provide a further push to revenues. The management expects
about 20% and 65% of future revenue to come from the data centre and
connectivity business, respectively, going forward.
Valuation
At the current market price of | 168, the stock is trading at 9.6x FY11E
diluted EPS of | 17.5 and 8.1x FY12E diluted EPS of | 20.8. We have
valued the stock at 10x FY12E EPS and arrived at a target price of | 208.
This implies an upside of 23%. We rate the stock as STRONG BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom- On expected lines…
Tulip Telecom reported its Q3FY11 results, which were in line with our
estimates. The topline stood at | 602.2 crore, growing 20.2% YoY and
2.9% QoQ. The EBITDA margin stood at 28.5% while the company
reported EBITDA of | 171.6 crore against our expectation of | 167.8
crore. EBITDA margins improved 154 bps YoY, primarily on account of
increasing share of the business of fibre optic. PAT stood at | 81.7 crore
(I-direct estimate of | 81.1 crore).
Highlights of the quarter
The revenue growth was driven on the back of higher growth on the
fibre network and conventional wireless business segment. The
company added a few major clients on its network during Q3FY11
that include the Apeejay group, Bhel, Berger, 3i infotech, Orissa
Mining Corporation and HCL Infosystems.
The company entered into a network-to-network interconnection
and joint marketing arrangement with Hutchison Global
Communications. The companies would be able to use each others
network to provide IP VPN services. Tulip Telecom would focus on
providing services to Indian enterprises having offices abroad.
Valuation
The management has taken several initiatives to increase the dependence
on fibre optic. Commissioning of the newly acquired data centre facility
would provide a further push to revenues. The management expects
about 20% and 65% of future revenue to come from the data centre and
connectivity business, respectively, going forward. At the current market
price of | 168, the stock is trading at 9.6x FY11E diluted EPS of | 17.5 and
8.1x FY12E diluted EPS of | 20.8. We have valued the stock at 10x FY12E
EPS and arrived at a target price of | 208. This implies an upside of 23%.
We have rated the stock as STRONG BUY.
Data centre
Tulip Telecom has acquired the data centre facility spread across 9
lakh sq ft for | 230 crore in this quarter. The company expects to
invest another | 300 crore by bringing in private equity/strategic
investor. It is also in talks with several vendors to design the data
centre. The company is looking to sell 25,000 sq feet of capacity
within the next six to nine months.
Outlook
Tulip Telecom’s numbers were in line with our expectations. The
management has taken several initiatives to increase the dependence on
fibre optic. Commissioning of the newly acquired data centre facility
would provide a further push to revenues. The management expects
about 20% and 65% of future revenue to come from the data centre and
connectivity business, respectively, going forward.
Valuation
At the current market price of | 168, the stock is trading at 9.6x FY11E
diluted EPS of | 17.5 and 8.1x FY12E diluted EPS of | 20.8. We have
valued the stock at 10x FY12E EPS and arrived at a target price of | 208.
This implies an upside of 23%. We rate the stock as STRONG BUY.
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