Bharti’s 4QFY15 results :: HDFC Securities

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Investments continue Bharti’s 4QFY15 results were a mixed bag as revenue was sub-par, EBITDA better than expected (owing to cost control) and PAT below estimates due to forex fluctuations. Consolidated revenue of Rs 231bn grew by 3.5% YoY and EBITDA was at Rs 81.1bn (+11% YoY, +4% QoQ). The India business is firing all cylinders as the company continues to reap benefits of increasing utilization of its data investments. We believe that incremental growth will need elevated investments, as is evinced by the steep increase in capex (FY15 capex of US$ 3bn versus guidance of US$ 2.2-2.4bn). Bharti continues to be a pioneer in rolling out new technologies and is well-poised to withstand competition. However, we believe that the market is discounting too many positives in the context of (1) the voice business facing continuing tariff pressures (2) the overhang of Reliance Jio’s imminent launch, which could trigger increased competition and result in lower data realizations and a spike in churn. We resume coverage with a sell rating and a target price of Rs 355 (target multiple of 6x FY17 EV/EBITDA for the Indian wireless business).  India – reaping benefits of cost control : Revenues of Rs 187.5bn grew by 10% YoY/2.3% QoQ; EBITDA grew by a healthy 22% YoY, 7% QoQ to Rs 68.9bn. In the mobile segment, minutes growth was at 4% QoQ/5% YoY, led by 4%QoQ/2%YoY decline in voice RPM. Management attributed the voice RPM decline to (1) reduced termination rate (2) competitive intensity. Data revenue grew by a healthy 10% QoQ/70% YoY, as usage grew by 12%QoQ/82%YoY.  Africa woes continue : Even on a constant currency basis, Bharti’s Africa EBITDA has been declining for the past five quarters, and now stands at US$257mn (reported EBITDA US$207mn). The company continues to mend its Africa operations by investing heavily in capex as well as fixed costs. Given the sustained disappointment, but firm management intent, we build in gradual improvement in operational performance.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3012285