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Focus on fibre to expand share and margins
First phase of the data centre will focus on 88,000 square feet. This should allow benefits of scale longer term. While the
first step is introduction of a strategic partner, data centre operations should begin over the next six months.
Fibre continues to be the focus; expecting c60-70% of revenues in FY13e to come from fibre-based business. This should
allow margin expansion and market share gains.
Capex estimates for next year are unlikely to exceed cUSD90m all-inclusive. The company is comfortable with net
debt/EBITDA of 2.5x and debt/equity of 1.25x.
The infrastructure created via radio is unlikely to lose value as the investments are allowing the company to participate in
various government projects like APDRP.
Biggest challenge will be execution so that the company can maintain its unique value proposition of faster response/lower
downtimes.
Valuation and risks
Our target price of INR235 is based on a blend of PE and DCF and implies PEs of 9.5x FY12e EPS and 7.5x FY13e EPS.
The stock is trading at 6.4x FY12e EPS and 4.1x FY12e EV/EBITDA. We expect EPS to grow 22% in FY12e and 27% in
FY13e, driven by other enterprise segments like IPLC, DLC, corporate internet as well as government projects.
Risks include lower than estimated pick up in the fibre business and cuts in corporate spending.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Focus on fibre to expand share and margins
First phase of the data centre will focus on 88,000 square feet. This should allow benefits of scale longer term. While the
first step is introduction of a strategic partner, data centre operations should begin over the next six months.
Fibre continues to be the focus; expecting c60-70% of revenues in FY13e to come from fibre-based business. This should
allow margin expansion and market share gains.
Capex estimates for next year are unlikely to exceed cUSD90m all-inclusive. The company is comfortable with net
debt/EBITDA of 2.5x and debt/equity of 1.25x.
The infrastructure created via radio is unlikely to lose value as the investments are allowing the company to participate in
various government projects like APDRP.
Biggest challenge will be execution so that the company can maintain its unique value proposition of faster response/lower
downtimes.
Valuation and risks
Our target price of INR235 is based on a blend of PE and DCF and implies PEs of 9.5x FY12e EPS and 7.5x FY13e EPS.
The stock is trading at 6.4x FY12e EPS and 4.1x FY12e EV/EBITDA. We expect EPS to grow 22% in FY12e and 27% in
FY13e, driven by other enterprise segments like IPLC, DLC, corporate internet as well as government projects.
Risks include lower than estimated pick up in the fibre business and cuts in corporate spending.
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