Please Share::
India Equity Research Reports, IPO and Stock NewsVisit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily02042012.pdf
4QFY12E preview – Bharti’s aggression dents the RPM uptick story for a while.
Flattish RPM, driven by pricing aggression from the market leader Bharti, is likely to
result in a modest 4QFY12E for the three listed players. Idea, led by industry-leading
volume growth, should still report a reasonably robust quarter. Bharti faces additional
pressure from local issues in Nigeria (impacting Africa performance) and forex losses on
account of Sri Lankan Rupee depreciation versus INR. Even as our medium-term positive
stance on Bharti and Idea remains intact, we would recommend trimming positions in
case of a 5-10% run-up ahead of results. Structural SELL stance on RCOM stays
4QFY12E earnings – RPM momentum derailed for a while
Exhibits 1, 2 and 3 give our Mar 2012 quarter earnings estimates for Bharti, Idea, and RCOM
respectively. We expect sequential volume growth to remain reasonably strong for Idea, bounce a
little for Bharti and remain subdued for RCOM. However, revenue growth is unlikely to find
support from sequential RPM uptick, as was the case in the past couple of quarters. Adjusted
margins will likely be in a narrow range for the three companies. We discuss the key factors to
watch, from an India wireless perspective –
` Volume growth – we expect robust sequential volume uptick for both Bharti and Idea. Even as
we expect Idea to lead the established players on volume growth again, we would keenly
monitor the extent of relative gains on this metric for Bharti to assess the early impact of the
company’s increased focus on stemming volume market share loss.
` RPM trajectory – Bharti’s recent pricing aggression in select markets is likely to have a bearing
on this metric though we do not expect any material decline in RPM qoq. We do not build in
meaningful gains on account of non-voice revenue growth – 3G adoption has not accelerated,
per our channel checks, even as the 2G data market remains on a robust growth path.
` Wireless margins – both Bharti and Idea had impact of one-offs on their India wireless margins
in the Dec 2011 quarter. Adjusted for the same, we expect flattish margins qoq. Volume
leverage is likely to be mitigated by increased subs acquisition costs as churn in the industry
remains high, in our view.
` Detailed indicators on 3G – even as idea started sharing some basic indicators beyond just 3G
subs base from the Dec 2011 quarter, we look forward to more details from Bharti and RCOM
on the 3G market.
Bharti – another quarter of subdued earnings likely
We expect Bharti to report a modest 1.3% qoq growth in consol revenues to Rs187.2 bn and a
4.5% growth (2%, adjusted for one-offs) in consol EBITDA to Rs62.3 bn. Revenue weakness
primarily stems from our expectation of a sequential decline in Re revenues from Africa wireless,
on account of two factors – (1) Re appreciation versus Bharti’s basket of African currencies, and
(2) impact of a 10-day strike in Nigeria in January. In addition, Bharti Infratel could report weak
revenue growth on the back of some impact of operations shutdown by some marginal operators
impacted by the SC license cancellation verdict. Bharti’s PAT for the quarter would also be
impacted by higher forex losses on account of INR appreciation versus Sri Lankan Rupee. Bharti’s
SL subsidiary has an INR shareholder loan from the parent (around Rs10 bn). Translation loss on
this loan (we estimate Rs1.7 bn) will hit Bharti’s consol P&L.
No comments:
Post a Comment