Showing posts with label Tulip Telecom. Show all posts
Showing posts with label Tulip Telecom. Show all posts
09 December 2012
31 August 2012
Tulip Telecom: Tulip misses deadline for FCCB redemption: Nomura research,
As per a release to the stock exchange, Tulip has been unable to meet
its 26 August maturity deadline for redeeming its FCCB and has stated
that it now endeavours to complete this exercise by 10 September.
Based on our initial discussion with the company, we understand there is
no official approval on this new timeline; rather, this is the extension
Tulip seeks from investors to complete the refinancing. Investors,
however, could choose not to wait and take legal recourse. Overall, this
is a disappointing development, in our view, especially as FCCB
redemptions have been an investor concern for the past several quarters
and the conversion option was well out of money. Tulip shares are down
10% in the last couple of days (note, the stock currently has a (+/-) 5%
daily trading band) and we believe there could be further downside
potential on the back of this uncertainty. Hence we would remain on the
sidelines until we get better clarity
22 August 2012
Tulip Telecom: Some recovery, not clear if out of woods yet: Nomura research,
Recovery in revenue growth to 8% q-q and margins to 27% (vs 26% in
the previous quarter) in this June quarter is a positive surprise, given
macro/competition headwinds the company has been facing in the past 2
quarters. Despite which, management notes that the near-term outlook
remains “mixed” suggesting that challenges could persist in the core
connectivity business. Moreover, take-up in the data center continues to
be slow (only 10%) while Tulip continues to make investments (INR2bn
for this year), which is a concern. Hence, we maintain Neutral. Tulip
recently announced that it is making progress on its FCCB redemption
(total amount of USD145mn). It has recently tied up USD80mn in debt,
while we believe the issue of fresh FCCBs for the remainder could still
be underway. The redemption date is only weeks away, and this is still a
concern and the stock could remain volatile ahead of this.
08 June 2012
Tulip Telecom Downgrade to UW: No respite HSBC Research
Tulip Telecom
Downgrade to UW: No respite
4Q results below estimates, margin decline by 300 bps
Management suggests margins pressure, we build for c4%
yoy decline in FY13e revenues
Downgrade to UW from Neutral and cut target to INR70 (from
INR125)
07 March 2012
Tulip Telecom:: Reco: HOLD ; Target Price: Rs 111 ::Emkay PDF link
Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
| ||
21 February 2012
Tulip Telecom: Overhangs clouding the horizon :Nomura research,
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Need to resolve pending issues for rerating
Action/valuation: Maintain Buy but TP reduced to INR150
Following recent 3Q results and Tulip’s announcement on debt funding for
the data center, we maintain our Buy rating with a reduced TP of INR150
but note that there are still some pending concerns which need to be
resolved for a re-rating to occur. Tulip’s core domestic trends have been
resilient, but the stock has underperformed the market significantly by
22% since 2011, and 3% YTD. Tulip’s current P/E of 5x is a 40-50%
discount to its historical average now. Key overhangs include:
Tulip’s debt levels have been a concern to the market and continue to rise
on account of rising working cap requirements and the investment in the
DC. The timing of events such as monetising its stake in the QCOM JV
remains uncertain and thus concern around leverage could remain, in our
view. Tulip’s FCCB are due for redemption in August (c.US$140mn
including yield) – it expects to have refinancing approvals by FY12, which
when completed should alleviate some investors’ concerns.
Tulip’s move to secure debt financing for the data center highlights
some challenges in finding an equity partner on the right terms, which
was the initial focus, and has been pursued for over six months now; we
believe this could further stretch the balance sheet in the near term.
Order ‘visibility’ on DC has improved to 225k sqft (175k sqft previously);
however, it could still take 2-3 quarters for rev trajectory to become visible.
Recent 3Q results for core business came in below expectations, and
management expects some slowdown in 4Q as well.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Need to resolve pending issues for rerating
Action/valuation: Maintain Buy but TP reduced to INR150
Following recent 3Q results and Tulip’s announcement on debt funding for
the data center, we maintain our Buy rating with a reduced TP of INR150
but note that there are still some pending concerns which need to be
resolved for a re-rating to occur. Tulip’s core domestic trends have been
resilient, but the stock has underperformed the market significantly by
22% since 2011, and 3% YTD. Tulip’s current P/E of 5x is a 40-50%
discount to its historical average now. Key overhangs include:
Tulip’s debt levels have been a concern to the market and continue to rise
on account of rising working cap requirements and the investment in the
DC. The timing of events such as monetising its stake in the QCOM JV
remains uncertain and thus concern around leverage could remain, in our
view. Tulip’s FCCB are due for redemption in August (c.US$140mn
including yield) – it expects to have refinancing approvals by FY12, which
when completed should alleviate some investors’ concerns.
Tulip’s move to secure debt financing for the data center highlights
some challenges in finding an equity partner on the right terms, which
was the initial focus, and has been pursued for over six months now; we
believe this could further stretch the balance sheet in the near term.
Order ‘visibility’ on DC has improved to 225k sqft (175k sqft previously);
however, it could still take 2-3 quarters for rev trajectory to become visible.
Recent 3Q results for core business came in below expectations, and
management expects some slowdown in 4Q as well.
13 February 2012
Buy Tulip Telecom; Target : Rs 141 ::ICICI Securities, PDF link
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_TulipIT_Q3FY12.pdf
H u g e d e b t a c o n c e r n …
Tulip Telecom reported its Q3FY12 numbers, which were lower than our
estimates with topline at | 686.6 crore against our expectation of | 727.2
crore, registering growth of 14.0% YoY but de-growing 2.3% QoQ
attributable to the headwinds in the macroeconomic environment.
EBITDA for the quarter was at | 199.1 crore at 29.0% of revenues,
growing 16.0% YoY and de-growing 2.0% QoQ. The bottomline was
marred by higher interest cost related to rising debt levels including high
cost mezzanine funding. PAT stood at | 77.3 crore against our
expectation of | 91.6 crore. Interest costs rose sharply by 23.8% QoQ to
| 42.7 crore.
Highlights of the quarter
The company continues to see high traction on the newly laid fibre optic
cable business, with about 83% of the new orders received in Q3FY12 on
fibre optics. The company also added various new clients in this quarter,
which included NTT Communications, Sahara Para Banking, Axis Bank,
Tata Mutual Fund and CBI among others.
Data Connectivity formed ~64% of total revenues, managed services
including data centre formed ~27% whereas network integration saw a
healthy growth and contributed ~ 9% to total revenues.
V a l u a t i o n
In light of the lower revenue growth forecast by the management and
increasing finance charges, we have lowered our EPS estimates for FY12
by | 21.9 to | 19.1 and for FY13 from | 22.9 to | 20.2. At the current
market price of | 115, the stock is trading at 6.0x FY12E diluted EPS of
| 19.1 and 5.7x FY13E diluted EPS of | 20.2. We have valued the stock at
7x FY13E EPS and arrived at a target price of | 141, which implies an
upside of 23%. The high levels of debt can remain an overhang on the
stock. We maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_TulipIT_Q3FY12.pdf
H u g e d e b t a c o n c e r n …
Tulip Telecom reported its Q3FY12 numbers, which were lower than our
estimates with topline at | 686.6 crore against our expectation of | 727.2
crore, registering growth of 14.0% YoY but de-growing 2.3% QoQ
attributable to the headwinds in the macroeconomic environment.
EBITDA for the quarter was at | 199.1 crore at 29.0% of revenues,
growing 16.0% YoY and de-growing 2.0% QoQ. The bottomline was
marred by higher interest cost related to rising debt levels including high
cost mezzanine funding. PAT stood at | 77.3 crore against our
expectation of | 91.6 crore. Interest costs rose sharply by 23.8% QoQ to
| 42.7 crore.
Highlights of the quarter
The company continues to see high traction on the newly laid fibre optic
cable business, with about 83% of the new orders received in Q3FY12 on
fibre optics. The company also added various new clients in this quarter,
which included NTT Communications, Sahara Para Banking, Axis Bank,
Tata Mutual Fund and CBI among others.
Data Connectivity formed ~64% of total revenues, managed services
including data centre formed ~27% whereas network integration saw a
healthy growth and contributed ~ 9% to total revenues.
V a l u a t i o n
In light of the lower revenue growth forecast by the management and
increasing finance charges, we have lowered our EPS estimates for FY12
by | 21.9 to | 19.1 and for FY13 from | 22.9 to | 20.2. At the current
market price of | 115, the stock is trading at 6.0x FY12E diluted EPS of
| 19.1 and 5.7x FY13E diluted EPS of | 20.2. We have valued the stock at
7x FY13E EPS and arrived at a target price of | 141, which implies an
upside of 23%. The high levels of debt can remain an overhang on the
stock. We maintain our BUY rating on the stock.
12 February 2012
Tulip Telecom: Slowdown impacts business growth : Centrum
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Slowdown impacts business growth
Tulip Telecom’s Q3FY12 revenue was below our estimates. Revenue was up
13.9% YoY at Rs6.8bn vs our estimate of Rs7.4bn due to slowdown in business
activity. However, EBITDA margin was in line with our estimate at 29% during
Q3. We revise our revenue assumption downward to factor in the uncertain
economic environment in the country which has decelerated the growth
momentum of the company. However, visibility in data centre is improving
and the company has orders worth Rs6bn for 5 years which bodes well
considering that it is a business in the investment phase. We believe that
negatives in terms of FCCB payout due in Aug 2012 is factored in the current
valuation. We re-iterate Buy rating with a revised target price of Rs205,
implying EV/EBITDA of 6.1x and 5.5x FY12E and FY13E respectively.
Results below expectation: Q3 result came below expectation. Tulip clocked
13.9% YoY revenue growth to Rs6.8bn as against our expectation of Rs7.4bn.
However, the business mix in favour of fibre based services helped the
company maintain operating margin at 29% (in line with our estimates).
Higher interest expenses and tax rate led to a decline in net profit by 5.3% YoY
to Rs773mn during Q3.
Return ratios slipping q-o-q: While the EBITDA margin remains intact, return
ratios slipped quarter by quarter due to continuous capex for its data center as
well as the existing fibre based segment. Also, working capital pressure has
increased with the company beginning to implement R-APDRP projects. We
believe that lower asset utilization would temporary put pressure on return
ratios. The reduction in capex from FY13, lower interest rate and monetization
of investment in Qualcomm/stake sale in subsidiary would reduce interest
burden going forward and improve return ratios.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Slowdown impacts business growth
Tulip Telecom’s Q3FY12 revenue was below our estimates. Revenue was up
13.9% YoY at Rs6.8bn vs our estimate of Rs7.4bn due to slowdown in business
activity. However, EBITDA margin was in line with our estimate at 29% during
Q3. We revise our revenue assumption downward to factor in the uncertain
economic environment in the country which has decelerated the growth
momentum of the company. However, visibility in data centre is improving
and the company has orders worth Rs6bn for 5 years which bodes well
considering that it is a business in the investment phase. We believe that
negatives in terms of FCCB payout due in Aug 2012 is factored in the current
valuation. We re-iterate Buy rating with a revised target price of Rs205,
implying EV/EBITDA of 6.1x and 5.5x FY12E and FY13E respectively.
Results below expectation: Q3 result came below expectation. Tulip clocked
13.9% YoY revenue growth to Rs6.8bn as against our expectation of Rs7.4bn.
However, the business mix in favour of fibre based services helped the
company maintain operating margin at 29% (in line with our estimates).
Higher interest expenses and tax rate led to a decline in net profit by 5.3% YoY
to Rs773mn during Q3.
Return ratios slipping q-o-q: While the EBITDA margin remains intact, return
ratios slipped quarter by quarter due to continuous capex for its data center as
well as the existing fibre based segment. Also, working capital pressure has
increased with the company beginning to implement R-APDRP projects. We
believe that lower asset utilization would temporary put pressure on return
ratios. The reduction in capex from FY13, lower interest rate and monetization
of investment in Qualcomm/stake sale in subsidiary would reduce interest
burden going forward and improve return ratios.
14 November 2011
Buy Tulip Telecom; Target :Rs 189 ::ICICI Securities
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B e t t e r - t h a n - e x p e c t e d r e s u l t s …
Tulip Telecom reported Q2FY12 numbers, which were better than our
estimates with topline at | 702.9 crore against our expectation of | 674.8
crore, registering growth of 20.1% YoY and 7.5% QoQ, primarily on
account of a rise in order input from high bandwidth fibre services.
EBITDA for the quarter stood at | 203.2 crore, at 28.9% of revenue,
growing 24.4% YoY. PAT stood at | 87.1 crore against our expectation of
| 82.1 crore. Interest cost rose sharply by 8.2% QoQ to | 34.5 crore on
account of an increase in total debt from | 1922.0 crore in Q1FY12 to |
2220.6 crore in Q2FY12 and also a rise in interest rates.
Highlights of the quarter
The company continues to see high traction on the newly laid fibre optic
cable business, with about 83% of new orders received in Q2FY12 on
fibre optic. The company also added various new clients in this quarter,
which includes Sahara India, Financial Corporation, Tata Interactive,
Euronet and IIHT among others.
Data Connectivity formed ~62% of the total revenues, managed services
including data centre formed ~32% whereas network integration
contributed ~ 6% to total revenues.
V a l u a t i o n
The company’s recent venture into the fibre optic business has shown
good traction with 83% of new orders coming on the fibre network. The
newly acquired data centre is scheduled to start booking revenues from
Q3FY12. We have estimated utilisation level of ~ 30% in the data centre
business in FY13. We estimate 20.4% CAGR (FY11-13E) in revenue to |
3408.2 crore in FY13 from | 2351.1 crore in FY11 while PAT is expected to
grow at 20.4% CAGR over same period to | 444.0 crore from 306.4 crore
in FY11. At the current market price of | 151, the stock is trading at 7.2x
FY12E diluted EPS of | 20.9 and 5.6x FY13E diluted EPS of | 27.0. We
value the stock at 7x FY13E EPS and arrive at a target price of | 189. This
implies an upside of 25%. The high levels of debt can remain an overhang
on the stock. We maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B e t t e r - t h a n - e x p e c t e d r e s u l t s …
Tulip Telecom reported Q2FY12 numbers, which were better than our
estimates with topline at | 702.9 crore against our expectation of | 674.8
crore, registering growth of 20.1% YoY and 7.5% QoQ, primarily on
account of a rise in order input from high bandwidth fibre services.
EBITDA for the quarter stood at | 203.2 crore, at 28.9% of revenue,
growing 24.4% YoY. PAT stood at | 87.1 crore against our expectation of
| 82.1 crore. Interest cost rose sharply by 8.2% QoQ to | 34.5 crore on
account of an increase in total debt from | 1922.0 crore in Q1FY12 to |
2220.6 crore in Q2FY12 and also a rise in interest rates.
Highlights of the quarter
The company continues to see high traction on the newly laid fibre optic
cable business, with about 83% of new orders received in Q2FY12 on
fibre optic. The company also added various new clients in this quarter,
which includes Sahara India, Financial Corporation, Tata Interactive,
Euronet and IIHT among others.
Data Connectivity formed ~62% of the total revenues, managed services
including data centre formed ~32% whereas network integration
contributed ~ 6% to total revenues.
V a l u a t i o n
The company’s recent venture into the fibre optic business has shown
good traction with 83% of new orders coming on the fibre network. The
newly acquired data centre is scheduled to start booking revenues from
Q3FY12. We have estimated utilisation level of ~ 30% in the data centre
business in FY13. We estimate 20.4% CAGR (FY11-13E) in revenue to |
3408.2 crore in FY13 from | 2351.1 crore in FY11 while PAT is expected to
grow at 20.4% CAGR over same period to | 444.0 crore from 306.4 crore
in FY11. At the current market price of | 151, the stock is trading at 7.2x
FY12E diluted EPS of | 20.9 and 5.6x FY13E diluted EPS of | 27.0. We
value the stock at 7x FY13E EPS and arrive at a target price of | 189. This
implies an upside of 25%. The high levels of debt can remain an overhang
on the stock. We maintain our BUY rating on the stock.
23 September 2011
UBS:: Tulip Telecom - Qualcomm BWA licence—not a big issue
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Tulip Telecom
Q ualcomm BWA licence—not a big issue
Event: newsflow—Qualcomm BWA application is deemed to be invalid
According to the Economic Times, Qualcomm may not be eligible for a Broadband
Wireless Access (BWA) licence in India as the Department of Telecom (DoT) is of
the view that Qualcomm did not apply for and acquire licences within three months
of the auction. However, the company denies violation of any rules and maintains
that it applied for licences within the required three-month window.
Impact: view the development as procedural issue
The newsflow is incrementally negative for Tulip as it holds a 13% stake in the
BWA JV with Qualcomm. However, we believe these are procedural issues and
view the event of Qualcomm not receiving the BWA licence as unlikely. Based on
our discussion with Tulip management, the company remains confident of
monetising its BWA investment. We value Tulip’s 13% stake in the BWA JV at
Rs9/share (at cost), contributing 3.5% to our price target.
Action: reiterate Buy with sum-of-the-parts-based price target of Rs260
We view any correction in the stock due to this newsflow as a buying opportunity.
We believe Tulip is well positioned to benefit from enterprise data growth given its
reach, relationships, enterprise focus, and largest last-mile fibre coverage. Further,
we believe the data centre offers upside potential to our valuation.
Valuation: Tulip is currently trading at FY12E EV/EBITDA of 4.1x
We value the core business at Rs251/share using a DCF-based methodology and
explicitly forecast long-term valuation drivers with UBS’s VCAM tool. We find
Tulip’s valuation attractive at 5.9x FY12E PE.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Tulip Telecom
Q ualcomm BWA licence—not a big issue
Event: newsflow—Qualcomm BWA application is deemed to be invalid
According to the Economic Times, Qualcomm may not be eligible for a Broadband
Wireless Access (BWA) licence in India as the Department of Telecom (DoT) is of
the view that Qualcomm did not apply for and acquire licences within three months
of the auction. However, the company denies violation of any rules and maintains
that it applied for licences within the required three-month window.
Impact: view the development as procedural issue
The newsflow is incrementally negative for Tulip as it holds a 13% stake in the
BWA JV with Qualcomm. However, we believe these are procedural issues and
view the event of Qualcomm not receiving the BWA licence as unlikely. Based on
our discussion with Tulip management, the company remains confident of
monetising its BWA investment. We value Tulip’s 13% stake in the BWA JV at
Rs9/share (at cost), contributing 3.5% to our price target.
Action: reiterate Buy with sum-of-the-parts-based price target of Rs260
We view any correction in the stock due to this newsflow as a buying opportunity.
We believe Tulip is well positioned to benefit from enterprise data growth given its
reach, relationships, enterprise focus, and largest last-mile fibre coverage. Further,
we believe the data centre offers upside potential to our valuation.
Valuation: Tulip is currently trading at FY12E EV/EBITDA of 4.1x
We value the core business at Rs251/share using a DCF-based methodology and
explicitly forecast long-term valuation drivers with UBS’s VCAM tool. We find
Tulip’s valuation attractive at 5.9x FY12E PE.
12 August 2011
Tulip Telecom - FY12 off to a strong start; Reiterate OW ::JPMorgan
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited Overweight
TULP.BO, TTSL IN
FY12 off to a strong start; Reiterate OW
Revenue growth accelerated, estimates increased: Tulip Telecom
delivered ~25% Y/Y revenue growth in Q1, beating our above-consensus
estimates. We believe a higher contribution from fibre, international
business (via the Hutchinson agreement) and quicker execution of orders
helped in Q1. We expect TTSL to maintain 20%+ growth levels for the rest
of the year and have increased or FY12 revenue estimates by 1%. With
incremental revenue streams expected to kick in, we forecast 23% revenue
growth (ahead of management’s 20% guidance) and 1pp margin expansion
to 29.2%.
Data Centre order win: The company announced its first DC client win.
This is for 30,000 sq ft over 5 years with a revenue potential of INR 5 bn.
We believe this indicates a rental of INR2.8K/month which is much higher
than the company's prior indication of INR 1.6K/month. We view the
announcement of a client here as a key positive for Tulip and we await the
announcement of an investor.
Watching debt and leverage: TTSL saw debt increase by Rs1.5B Q/Q
while leverage (debt/EBITDA) declined very slightly to 2.6x from 2.7x. The
debt increase was driven by the core business. We would be encouraged to
see an indication of effort/steps taken to bring down leverage and debt,
which will be a key focus in FY12, according to management.
Forecast changes: Our estimates are revised very slightly post Q1 results.
We increase our FY12/FY13 revenue estimates slightly by 0.9%/0.6% but
leave our margin estimates unchanged at 29.2%/30.5%. Our EPS estimates
are now INR 21.8/29.4 (basic EPS of INR 24.5.31.5)
Mar-12 PT of Rs230: Our price target remains unchanged. Announcements
of more clients or an investor for the data centre business should be key
positive catalysts. The core business continues to show improvements.
TTSL trades at 6.4x 1-yr forward P/E a 29% discount to its three-year
average, and at 4.0 EV/EBITDA, a 33% discount. Key risks: stiffer-thanexpected
price competition in TTSL’s core business, and a slower-thanexpected
ramp-up of its data center business.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited Overweight
TULP.BO, TTSL IN
FY12 off to a strong start; Reiterate OW
Revenue growth accelerated, estimates increased: Tulip Telecom
delivered ~25% Y/Y revenue growth in Q1, beating our above-consensus
estimates. We believe a higher contribution from fibre, international
business (via the Hutchinson agreement) and quicker execution of orders
helped in Q1. We expect TTSL to maintain 20%+ growth levels for the rest
of the year and have increased or FY12 revenue estimates by 1%. With
incremental revenue streams expected to kick in, we forecast 23% revenue
growth (ahead of management’s 20% guidance) and 1pp margin expansion
to 29.2%.
Data Centre order win: The company announced its first DC client win.
This is for 30,000 sq ft over 5 years with a revenue potential of INR 5 bn.
We believe this indicates a rental of INR2.8K/month which is much higher
than the company's prior indication of INR 1.6K/month. We view the
announcement of a client here as a key positive for Tulip and we await the
announcement of an investor.
Watching debt and leverage: TTSL saw debt increase by Rs1.5B Q/Q
while leverage (debt/EBITDA) declined very slightly to 2.6x from 2.7x. The
debt increase was driven by the core business. We would be encouraged to
see an indication of effort/steps taken to bring down leverage and debt,
which will be a key focus in FY12, according to management.
Forecast changes: Our estimates are revised very slightly post Q1 results.
We increase our FY12/FY13 revenue estimates slightly by 0.9%/0.6% but
leave our margin estimates unchanged at 29.2%/30.5%. Our EPS estimates
are now INR 21.8/29.4 (basic EPS of INR 24.5.31.5)
Mar-12 PT of Rs230: Our price target remains unchanged. Announcements
of more clients or an investor for the data centre business should be key
positive catalysts. The core business continues to show improvements.
TTSL trades at 6.4x 1-yr forward P/E a 29% discount to its three-year
average, and at 4.0 EV/EBITDA, a 33% discount. Key risks: stiffer-thanexpected
price competition in TTSL’s core business, and a slower-thanexpected
ramp-up of its data center business.
09 August 2011
Buy Tulip Telecom; Target : Rs 189: ICICI Securities,
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
I n l i n e w i t h e s t i m a t e s …
Tulip Telecom reported its Q1FY12 numbers, which were in line with our
estimates with the topline at | 653.9 crore against our expectation of |
646.3 crore, registering growth of 24.5% YoY and 2.5% QoQ, primarily on
account of a rise in order input from high bandwidth fibre services.
EBITDA for the quarter stood at | 184.8 crore at 28.3% of revenue,
growing 30.4% YoY. PAT stood at | 77.2 crore against our expectation of
| 76.5 crore. Interest cost rose sharply by 19.6% QoQ to | 31.9 crore on
account of an increase in total debt from | 1776.9 crore in Q4FY11 to |
1922.0 crore in Q1FY12 and also a rise in interest rates.
ƒ Highlights of the quarter
The company continues to see high traction on the newly laid fibre
optic cable business, with about 80% of new orders received in
Q1FY12 on fibre optic. The company also added various new clients
in this quarter, which include Matrix Cellular, OICL, Karur Vysya
Bank, Reliance Life Insurance, Gamesa and Deccan Charter.
Tulip Telecom laid a 1200 km NLD fibre at a total capex of | 60 crore
between Mumbai and Chennai. The company expects payback of
around two years. Its last mile fibre network spans over 7200 km.
V a l u a t i o n
The company’s recent venture into the fibre optic business has shown
good traction with 80% of new orders coming on the fibre network. The
newly acquired data centre is progressing as planned and is scheduled to
go commercially live in Q2FY12. We have estimated utilisation level of
~30% in the data centre business in FY13. We estimate 19.3% CAGR
(FY11-13E) in revenue to | 3344.2 crore in FY13 while the PAT is expected
to grow at 20.3% CAGR over the same period to | 443.6 crore. However,
rising debt level at 1.5x debt to equity remains a cause for concern. At the
CMP of | 157, the stock is trading at 5.8x FY13E diluted EPS of | 27.0. We
have valued the stock at 7x FY13E EPS and arrived at a target price of |
189. This implies an upside of 20%. We maintain our BUY rating on the
stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
I n l i n e w i t h e s t i m a t e s …
Tulip Telecom reported its Q1FY12 numbers, which were in line with our
estimates with the topline at | 653.9 crore against our expectation of |
646.3 crore, registering growth of 24.5% YoY and 2.5% QoQ, primarily on
account of a rise in order input from high bandwidth fibre services.
EBITDA for the quarter stood at | 184.8 crore at 28.3% of revenue,
growing 30.4% YoY. PAT stood at | 77.2 crore against our expectation of
| 76.5 crore. Interest cost rose sharply by 19.6% QoQ to | 31.9 crore on
account of an increase in total debt from | 1776.9 crore in Q4FY11 to |
1922.0 crore in Q1FY12 and also a rise in interest rates.
ƒ Highlights of the quarter
The company continues to see high traction on the newly laid fibre
optic cable business, with about 80% of new orders received in
Q1FY12 on fibre optic. The company also added various new clients
in this quarter, which include Matrix Cellular, OICL, Karur Vysya
Bank, Reliance Life Insurance, Gamesa and Deccan Charter.
Tulip Telecom laid a 1200 km NLD fibre at a total capex of | 60 crore
between Mumbai and Chennai. The company expects payback of
around two years. Its last mile fibre network spans over 7200 km.
V a l u a t i o n
The company’s recent venture into the fibre optic business has shown
good traction with 80% of new orders coming on the fibre network. The
newly acquired data centre is progressing as planned and is scheduled to
go commercially live in Q2FY12. We have estimated utilisation level of
~30% in the data centre business in FY13. We estimate 19.3% CAGR
(FY11-13E) in revenue to | 3344.2 crore in FY13 while the PAT is expected
to grow at 20.3% CAGR over the same period to | 443.6 crore. However,
rising debt level at 1.5x debt to equity remains a cause for concern. At the
CMP of | 157, the stock is trading at 5.8x FY13E diluted EPS of | 27.0. We
have valued the stock at 7x FY13E EPS and arrived at a target price of |
189. This implies an upside of 20%. We maintain our BUY rating on the
stock.
Tulip Telecom - Growth momentum on track, Maintain BUY:Emkay
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom
|
Growth momentum on track, Maintain BUY
|
BUY
CMP: Rs157 Target Price: Rs218
n Revenue at Rs6.5bn (better than our est. of Rs6.4bn) grew 24.5% yoy, led higher revenue realization in from the fibre business which aided the strong margins as well
n Q1FY12 EBIDTA grew 30.4% to Rs1.8bn and APAT grew 20.4% yoy to Rs772mn (our est. of Rs743mn). Strong revenue and EBITDA led to PAT growth of 20.4% yoy
n Net-debt rises to Rs16.5bn at the end of Q1FY12 v/s Rs14.3bn in Q4FY11, due to higher working capital requirements. Debt/EBITDA stands at 2.6x and D/E at 1.5x
n Valuations attractive at FY13E EV/EBIDTA of 3.3x & P/E 5.9x. Maintain BUY with TP of Rs218
07 August 2011
Tulip Telecom Q1'FY12: Strong results with revenue growth acceleration; Data Centre order win ::JPMorgan
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom has reported a strong set of Q1FY12 results with an
acceleration in Y/Y growth rate to 25%, ahead of the 19-20% seen during
FY11. We believe this points to increasing contribution from the fibre
business. The other key development is the order win for its Data Centre (DC)
business for 30K sq ft. EBITDA margin in the quarter was under slight
pressure as a result of seasonality but the net profit beat both JPMe and
consensus. We continue to like Tulip and see these results as confirmation of
improving trends. DC business progress will be well received in our view.
Q1 revenue of INR 6,539mn, +2.5% Q/Q, +24.5% Y/Y: Q1 revenue beat
JPMe/consensus of INR 6,458m/INR 6,316m by 1%/4%. We note that Q3
and Q4 tend to be the stronger quarters for Tulip so are encouraged with the
Q/Q growth in Q1FY12 (-1% in Q1FY11, -4% in Q1FY10). We also note
that the Y/Y growth rate has accelerated nicely from 19-20% range in FY11
to ~25% in Q1FY12. We believe this is a result of high-bandwidth fibre
business starting to have a positive impact. We expect consensus to increase
their FY12 revenue estimates slightly as a result of the Q1 beat.
Data centre progressing well: Tulip's data centre is expected to become
commercially active from Q2FY12. The company announced an order win
from a global organization for 30K sq ft over 5 years with potential revenue
of INR 5bn. Their order visibility is 150K sq ft.
Revenue break-down: Connectivity contributed 60% of revenue (68% in
Q4), managed services is 33% up from 21% while network integration is
7%. Vs. 11%. Fibre contribution was strong again with 80% of new orders
on fibre in the quarter stable vs. Q4 and up from 70% in Q3. Tulip’s last
mile fibre network now spans over 7200 km vs. ~6000 km earlier. UP and
Gujarat R-APDRP are expected to start contributing revenue from Q2.
Margin under slight pressure: Consolidated EBITDA margin was 28.3%,
in-line with JPMe’s 28.4% but ahead of cons 27.9%. Margin declined 1pp
Q/Q after the 80bp increase in Q4, 55bp in Q3 and 90bp in Q2. We believe
this is normal seasonality. On a Y/Y basis margins improved 1.2pp.
Absolute EBITDA of INR 1.85bn is 1%5% ahead of JPMe/cons.
Net profit was INR 772mn ahead of JPMe/cons of INR 670mn/INR
731mn. Q1 EPS was INR 4.75 (-7% Q/Q, +20% Y/Y) vs. JPMe/cons of INR
4.1/4.5. We note that interest expense is INR 319m vs. INR 267m in Q4.
The company has said that the overall cost of funds has increased to 10.2%
from 8.6% a year ago.
Q1 capex at INR 1.39bn, 21% of calex: This is below JPMe of INR 1.9bn
and also down from the INR 1.5bn spent on the core business in Q4.
TTSL reported total debt of INR 19.2bn vs. INR 17.8bn in Q4 Debt/equity
has increased to 1.50x from 1.47x while debt/EBITDA has declined slightly
to 2.60x from 2.68x
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom has reported a strong set of Q1FY12 results with an
acceleration in Y/Y growth rate to 25%, ahead of the 19-20% seen during
FY11. We believe this points to increasing contribution from the fibre
business. The other key development is the order win for its Data Centre (DC)
business for 30K sq ft. EBITDA margin in the quarter was under slight
pressure as a result of seasonality but the net profit beat both JPMe and
consensus. We continue to like Tulip and see these results as confirmation of
improving trends. DC business progress will be well received in our view.
Q1 revenue of INR 6,539mn, +2.5% Q/Q, +24.5% Y/Y: Q1 revenue beat
JPMe/consensus of INR 6,458m/INR 6,316m by 1%/4%. We note that Q3
and Q4 tend to be the stronger quarters for Tulip so are encouraged with the
Q/Q growth in Q1FY12 (-1% in Q1FY11, -4% in Q1FY10). We also note
that the Y/Y growth rate has accelerated nicely from 19-20% range in FY11
to ~25% in Q1FY12. We believe this is a result of high-bandwidth fibre
business starting to have a positive impact. We expect consensus to increase
their FY12 revenue estimates slightly as a result of the Q1 beat.
Data centre progressing well: Tulip's data centre is expected to become
commercially active from Q2FY12. The company announced an order win
from a global organization for 30K sq ft over 5 years with potential revenue
of INR 5bn. Their order visibility is 150K sq ft.
Revenue break-down: Connectivity contributed 60% of revenue (68% in
Q4), managed services is 33% up from 21% while network integration is
7%. Vs. 11%. Fibre contribution was strong again with 80% of new orders
on fibre in the quarter stable vs. Q4 and up from 70% in Q3. Tulip’s last
mile fibre network now spans over 7200 km vs. ~6000 km earlier. UP and
Gujarat R-APDRP are expected to start contributing revenue from Q2.
Margin under slight pressure: Consolidated EBITDA margin was 28.3%,
in-line with JPMe’s 28.4% but ahead of cons 27.9%. Margin declined 1pp
Q/Q after the 80bp increase in Q4, 55bp in Q3 and 90bp in Q2. We believe
this is normal seasonality. On a Y/Y basis margins improved 1.2pp.
Absolute EBITDA of INR 1.85bn is 1%5% ahead of JPMe/cons.
Net profit was INR 772mn ahead of JPMe/cons of INR 670mn/INR
731mn. Q1 EPS was INR 4.75 (-7% Q/Q, +20% Y/Y) vs. JPMe/cons of INR
4.1/4.5. We note that interest expense is INR 319m vs. INR 267m in Q4.
The company has said that the overall cost of funds has increased to 10.2%
from 8.6% a year ago.
Q1 capex at INR 1.39bn, 21% of calex: This is below JPMe of INR 1.9bn
and also down from the INR 1.5bn spent on the core business in Q4.
TTSL reported total debt of INR 19.2bn vs. INR 17.8bn in Q4 Debt/equity
has increased to 1.50x from 1.47x while debt/EBITDA has declined slightly
to 2.60x from 2.68x
05 August 2011
UBS: Tulip Telecom -Good start to the year
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Tulip Telecom
G ood start to the year
�� Event: 1QFY12 results – Revenue, EBITDA ahead of expectations
Tulip Telecom announced consolidated 1QFY12 results: Revenues were Rs6,539m
(UBS-e Rs6,348m), EBITDA came in at Rs1,848m (UBS-e Rs1,765m) and net
profit was Rs772m (UBS-e Rs739m). EBITDA margins at 28.3% (vs. UBS-e
27.8%) continue to improve as contribution of fibre business increases.
Operationally also Tulip did well in 1QFY12 with 80% of new orders coming on
fibre. On Data Centre, Tulip got a 5 year order for 30,000 sq ft worth Rs5,000m.
The company mentioned that it is currently pursuing orders for 150,000 sq ft.
�� Impact: Maintain our FY12E/FY13E estimates
We maintain our FY12E/FY13E earnings estimates. We expect net income to grow
by 18.4% and 20.4% in FY12E and FY13E to Rs3,636m and Rs4,379m resp. The
company is hosting a conference call tomorrow at 14:00 India time (Table 4).
�� Action: Reiterate Buy with SOTP based PT of Rs260
Tulip offers pure exposure to the India enterprise data market. We believe Tulip is
well positioned to benefit from enterprise data growth, given its reach (2,200
cities); relationships (corporate and government), enterprise focus; and largest lastmile
fibre coverage. We think Tulip could be a potential acquisition candidate.
�� Valuation: Tulip is currently trading at FY12E EV/EBITDA of 4.2x
We value the core business at Rs251/share, using a DCF-based methodology and
explicitly forecast long-term valuation drivers with UBS’s VCAM tool. We ascribe
Rs9/share (at cost) to Tulip’s 13% stake in Qualcomm’s BWA joint venture. We
find Tulip’s valuation attractive at 6.1x FY12E PE.
Tulip Telecom
Tulip Telecom (Tulip) is the largest multi-protocol label switching virtual
private network (MPLS VPN) service provider in India. Initially, it used
wireless spectrum for 'last-mile' connectivity, but in recent years it has focused
on laying last-mile fibre network so as to offer high bandwidth products. Tulip
leases inter-city fibre from large telecom or state utility firms. The company is
focused on being a complete enterprise data company. Tulip has approximately
6,600km of last-mile fibre in more than 300 cities. It has over 2,200 clients and
covers 2,000 cities. The company also has five Tier3+ data centres.
Statement of Risk
In addition to the risks affecting the Indian Telecom sector, we believe that the
following are the company-specific risks to our buy thesis: 1) Execution delays
in the data centre entity could impact Tulip's consolidated performance; 2) Tulip
continues to remain free cash flow negative; 3) Irrational competition in the
enterprise data segment could impact Tulip's revenue and profitability; 4)
Inability to pay FCCBs due on Aug 2012 could be a negative overhang on the
company
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Tulip Telecom
G ood start to the year
�� Event: 1QFY12 results – Revenue, EBITDA ahead of expectations
Tulip Telecom announced consolidated 1QFY12 results: Revenues were Rs6,539m
(UBS-e Rs6,348m), EBITDA came in at Rs1,848m (UBS-e Rs1,765m) and net
profit was Rs772m (UBS-e Rs739m). EBITDA margins at 28.3% (vs. UBS-e
27.8%) continue to improve as contribution of fibre business increases.
Operationally also Tulip did well in 1QFY12 with 80% of new orders coming on
fibre. On Data Centre, Tulip got a 5 year order for 30,000 sq ft worth Rs5,000m.
The company mentioned that it is currently pursuing orders for 150,000 sq ft.
�� Impact: Maintain our FY12E/FY13E estimates
We maintain our FY12E/FY13E earnings estimates. We expect net income to grow
by 18.4% and 20.4% in FY12E and FY13E to Rs3,636m and Rs4,379m resp. The
company is hosting a conference call tomorrow at 14:00 India time (Table 4).
�� Action: Reiterate Buy with SOTP based PT of Rs260
Tulip offers pure exposure to the India enterprise data market. We believe Tulip is
well positioned to benefit from enterprise data growth, given its reach (2,200
cities); relationships (corporate and government), enterprise focus; and largest lastmile
fibre coverage. We think Tulip could be a potential acquisition candidate.
�� Valuation: Tulip is currently trading at FY12E EV/EBITDA of 4.2x
We value the core business at Rs251/share, using a DCF-based methodology and
explicitly forecast long-term valuation drivers with UBS’s VCAM tool. We ascribe
Rs9/share (at cost) to Tulip’s 13% stake in Qualcomm’s BWA joint venture. We
find Tulip’s valuation attractive at 6.1x FY12E PE.
Tulip Telecom
Tulip Telecom (Tulip) is the largest multi-protocol label switching virtual
private network (MPLS VPN) service provider in India. Initially, it used
wireless spectrum for 'last-mile' connectivity, but in recent years it has focused
on laying last-mile fibre network so as to offer high bandwidth products. Tulip
leases inter-city fibre from large telecom or state utility firms. The company is
focused on being a complete enterprise data company. Tulip has approximately
6,600km of last-mile fibre in more than 300 cities. It has over 2,200 clients and
covers 2,000 cities. The company also has five Tier3+ data centres.
Statement of Risk
In addition to the risks affecting the Indian Telecom sector, we believe that the
following are the company-specific risks to our buy thesis: 1) Execution delays
in the data centre entity could impact Tulip's consolidated performance; 2) Tulip
continues to remain free cash flow negative; 3) Irrational competition in the
enterprise data segment could impact Tulip's revenue and profitability; 4)
Inability to pay FCCBs due on Aug 2012 could be a negative overhang on the
company
31 July 2011
JPMorgan:: Buy Tulip Telecom- FY12 off to a strong start; Reiterate OW
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
FY12 off to a strong start; Reiterate OW
Revenue growth accelerated, estimates increased: Tulip Telecom
delivered ~25% Y/Y revenue growth in Q1, beating our above-consensus
estimates. We believe a higher contribution from fibre, international
business (via the Hutchinson agreement) and quicker execution of orders
helped in Q1. We expect TTSL to maintain 20%+ growth levels for the rest
of the year and have increased or FY12 revenue estimates by 1%. With
incremental revenue streams expected to kick in, we forecast 23% revenue
growth (ahead of management’s 20% guidance) and 1pp margin expansion
to 29.2%.
Data Centre order win: The company announced its first DC client win.
This is for 30,000 sq ft over 5 years with a revenue potential of INR 5 bn.
We believe this indicates a rental of INR2.8K/month which is much higher
than the company's prior indication of INR 1.6K/month. We view the
announcement of a client here as a key positive for Tulip and we await the
announcement of an investor.
Watching debt and leverage: TTSL saw debt increase by Rs1.5B Q/Q
while leverage (debt/EBITDA) declined very slightly to 2.6x from 2.7x. The
debt increase was driven by the core business. We would be encouraged to
see an indication of effort/steps taken to bring down leverage and debt,
which will be a key focus in FY12, according to management.
Forecast changes: Our estimates are revised very slightly post Q1 results.
We increase our FY12/FY13 revenue estimates slightly by 0.9%/0.6% but
leave our margin estimates unchanged at 29.2%/30.5%. Our EPS estimates
are now INR 21.8/29.4 (basic EPS of INR 24.5.31.5)
Mar-12 PT of Rs230: Our price target remains unchanged. Announcements
of more clients or an investor for the data centre business should be key
positive catalysts. The core business continues to show improvements.
TTSL trades at 6.4x 1-yr forward P/E a 29% discount to its three-year
average, and at 4.0 EV/EBITDA, a 33% discount. Key risks: stiffer-thanexpected price competition in TTSL’s core business, and a slower-thanexpected ramp-up of its data center business.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
FY12 off to a strong start; Reiterate OW
Revenue growth accelerated, estimates increased: Tulip Telecom
delivered ~25% Y/Y revenue growth in Q1, beating our above-consensus
estimates. We believe a higher contribution from fibre, international
business (via the Hutchinson agreement) and quicker execution of orders
helped in Q1. We expect TTSL to maintain 20%+ growth levels for the rest
of the year and have increased or FY12 revenue estimates by 1%. With
incremental revenue streams expected to kick in, we forecast 23% revenue
growth (ahead of management’s 20% guidance) and 1pp margin expansion
to 29.2%.
Data Centre order win: The company announced its first DC client win.
This is for 30,000 sq ft over 5 years with a revenue potential of INR 5 bn.
We believe this indicates a rental of INR2.8K/month which is much higher
than the company's prior indication of INR 1.6K/month. We view the
announcement of a client here as a key positive for Tulip and we await the
announcement of an investor.
Watching debt and leverage: TTSL saw debt increase by Rs1.5B Q/Q
while leverage (debt/EBITDA) declined very slightly to 2.6x from 2.7x. The
debt increase was driven by the core business. We would be encouraged to
see an indication of effort/steps taken to bring down leverage and debt,
which will be a key focus in FY12, according to management.
Forecast changes: Our estimates are revised very slightly post Q1 results.
We increase our FY12/FY13 revenue estimates slightly by 0.9%/0.6% but
leave our margin estimates unchanged at 29.2%/30.5%. Our EPS estimates
are now INR 21.8/29.4 (basic EPS of INR 24.5.31.5)
Mar-12 PT of Rs230: Our price target remains unchanged. Announcements
of more clients or an investor for the data centre business should be key
positive catalysts. The core business continues to show improvements.
TTSL trades at 6.4x 1-yr forward P/E a 29% discount to its three-year
average, and at 4.0 EV/EBITDA, a 33% discount. Key risks: stiffer-thanexpected price competition in TTSL’s core business, and a slower-thanexpected ramp-up of its data center business.
11 June 2011
Tulip Telecom (TULP.BO;–Takeaways from Citi India Investor Conference – Day 1
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom (TULP.BO; Rs165.45; 1M)
Takeaways from Mumbai - Tulip Telecom presented at the Citi Investor
Conference in Mumbai. Below are the key takeaways.
What’s new - Management disclosed its on-ground intra-city fiber network to be
~15000km, having incurred a capex of Rs12-13bn in the last two years. Peak of
capex intensity however is behind us as it doesn’t expect to meaningfully expand
beyond the existing 300 cities. The payback period is typically 3-4 years (across
cities) and it expects EBITDA margins to expand 70-75bps in each of the next
two years arising from scale benefits. Average bandwidth prices have fallen
~15% annually in the past though there seems to be some let-up in the
competitive intensity in the last two quarters.
Wireless connectivity: Still registering decent growth - The wireless data
connectivity business margins are currently >20% with bulk of the top-line growth
coming from Government contracts (read APDRP). The company has also
recently been awarded a contract by the State Bank of India (along with Bharti) to
connect its 19,000 branches. Meanwhile it believes there is little risk of pricing of
the unlicensed spectrum bands (2.8/3.3GHz) it is currently using by the
Government in context of the current 2G spectrum controversy.
Data centre ramp-up on track - The first phase of the data centre (~25k sq ft;
total of 430k total capacity) is likely to be completed by the third week of August
at a cost of Rs18,000/sq ft. PAT losses in the first year are likely to be ~US$6m
with BE in FY13E. Longer term, the company expects top line of ~US$200m (at
90-95% capacity utilization; rental of Rs20k/sq ft). Meanwhile the stake sale (up
to 30%) should be finalized in the next six weeks.
Maintain Buy - The company has started to benefit from fiber in terms of scale
economies and higher profitability. Revenues from the data centre (ramp-up in
18-24 months), should help improve the company's revenue visibility. The stock
is trading at ~9x FY12E PER, relatively cheap looking given the medium-term
growth potential. Disruptive pricing from new competition in data connectivity and
slower ramp-up in data centre revenues are the key downside risks.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom (TULP.BO; Rs165.45; 1M)
Takeaways from Mumbai - Tulip Telecom presented at the Citi Investor
Conference in Mumbai. Below are the key takeaways.
What’s new - Management disclosed its on-ground intra-city fiber network to be
~15000km, having incurred a capex of Rs12-13bn in the last two years. Peak of
capex intensity however is behind us as it doesn’t expect to meaningfully expand
beyond the existing 300 cities. The payback period is typically 3-4 years (across
cities) and it expects EBITDA margins to expand 70-75bps in each of the next
two years arising from scale benefits. Average bandwidth prices have fallen
~15% annually in the past though there seems to be some let-up in the
competitive intensity in the last two quarters.
Wireless connectivity: Still registering decent growth - The wireless data
connectivity business margins are currently >20% with bulk of the top-line growth
coming from Government contracts (read APDRP). The company has also
recently been awarded a contract by the State Bank of India (along with Bharti) to
connect its 19,000 branches. Meanwhile it believes there is little risk of pricing of
the unlicensed spectrum bands (2.8/3.3GHz) it is currently using by the
Government in context of the current 2G spectrum controversy.
Data centre ramp-up on track - The first phase of the data centre (~25k sq ft;
total of 430k total capacity) is likely to be completed by the third week of August
at a cost of Rs18,000/sq ft. PAT losses in the first year are likely to be ~US$6m
with BE in FY13E. Longer term, the company expects top line of ~US$200m (at
90-95% capacity utilization; rental of Rs20k/sq ft). Meanwhile the stake sale (up
to 30%) should be finalized in the next six weeks.
Maintain Buy - The company has started to benefit from fiber in terms of scale
economies and higher profitability. Revenues from the data centre (ramp-up in
18-24 months), should help improve the company's revenue visibility. The stock
is trading at ~9x FY12E PER, relatively cheap looking given the medium-term
growth potential. Disruptive pricing from new competition in data connectivity and
slower ramp-up in data centre revenues are the key downside risks.
23 May 2011
JPMorgan:: Tulip Telecom- Another good quarter with positive indications for FY12; reiterate Overweight
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
Another good quarter with positive indications for
FY12; reiterate Overweight
• Business strength continues: Tulip Telecom in 4Q delivered sustained
revenue growth (+20% Y/Y) and expanding margins once again (+80bp
Q/Q) as the contribution from fiber ramped up nicely to 80% of new
orders. With incremental revenue streams (R-APDRP projects,
International connectivity, data centre) expected to kick in, we expect
these trends to continue, and we forecast 23% revenue growth and 1pp
margin expansion to 29.2%. Management expects the 20% revenue
growth rate of FY11 to continue in FY12, which we view as slightly
conservative.
• Watching debt and leverage: TTSL saw debt increase by Rs3.3B Q/Q
and leverage (debt/EBITDA) increase to 2.7x (from 2.1x). While this
was due to the well flagged data center investment the company made,
we would be encouraged to see an indication of effort/steps taken to
bring down leverage and debt, which will be a key focus in FY12,
according to management.
• Forecast changes: We reduce our FY12/FY13 revenue estimates by
2.9%/3.4% but increase our margin estimates by 0.9/1.0pp on account of
the beat in 4Q, resulting in no change in our absolute EBITDA estimates
of Rs8.4/Rs10.7B. However, higher interest costs drive a Rs2.5/Rs2.4
reduction is our FY12/13 EPS estimates to Rs20/28.
• New Mar-12 PT of Rs230 (40% upside): As a result of our estimate
changes and rolling forward our timeframe from Dec-11 to Mar-12, our
PT falls slightly to Rs230. Announcements of clients or an investor for
the data centre business should be key positive catalysts. The core
business continues to show improvement in both revenue growth and
margin expansion. TTSL trades at 8.2x FY12E P/E, a 12% discount to its
three-year average, and at 5.1x FY12E EV/EBITDA, a 21% discount.
Key risks: stiffer-than-expected price competition in TTSL’s core
business, and a slower-than-expected ramp-up of its data center business.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
Another good quarter with positive indications for
FY12; reiterate Overweight
• Business strength continues: Tulip Telecom in 4Q delivered sustained
revenue growth (+20% Y/Y) and expanding margins once again (+80bp
Q/Q) as the contribution from fiber ramped up nicely to 80% of new
orders. With incremental revenue streams (R-APDRP projects,
International connectivity, data centre) expected to kick in, we expect
these trends to continue, and we forecast 23% revenue growth and 1pp
margin expansion to 29.2%. Management expects the 20% revenue
growth rate of FY11 to continue in FY12, which we view as slightly
conservative.
• Watching debt and leverage: TTSL saw debt increase by Rs3.3B Q/Q
and leverage (debt/EBITDA) increase to 2.7x (from 2.1x). While this
was due to the well flagged data center investment the company made,
we would be encouraged to see an indication of effort/steps taken to
bring down leverage and debt, which will be a key focus in FY12,
according to management.
• Forecast changes: We reduce our FY12/FY13 revenue estimates by
2.9%/3.4% but increase our margin estimates by 0.9/1.0pp on account of
the beat in 4Q, resulting in no change in our absolute EBITDA estimates
of Rs8.4/Rs10.7B. However, higher interest costs drive a Rs2.5/Rs2.4
reduction is our FY12/13 EPS estimates to Rs20/28.
• New Mar-12 PT of Rs230 (40% upside): As a result of our estimate
changes and rolling forward our timeframe from Dec-11 to Mar-12, our
PT falls slightly to Rs230. Announcements of clients or an investor for
the data centre business should be key positive catalysts. The core
business continues to show improvement in both revenue growth and
margin expansion. TTSL trades at 8.2x FY12E P/E, a 12% discount to its
three-year average, and at 5.1x FY12E EV/EBITDA, a 21% discount.
Key risks: stiffer-than-expected price competition in TTSL’s core
business, and a slower-than-expected ramp-up of its data center business.
17 May 2011
Tulip Telecom Growth on track, Maintain BUY : Emkay
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom
|
Growth on track, Maintain BUY
|
BUY
CMP: Rs 163 Target Price: Rs 218
n Revenue at Rs 6.4bn (slightly below estimates) grew 20.2% yoy, led higher revenue realization in from the fibre business which aided the strong margins as well
n Q4FY11 EBIDTA grew 20.8% to Rs1.9bn and APAT grew 25.7% yoy to Rs826mn (our est. of Rs 974mn). Lower PAT was on account of higher interest and tax outgo
n Net-debt rises to Rs14.3bn at the end of FY11 v/s Rs12.4bn in Q3FY11. Debt/EBITDA stands at 2.7x and D/E at 1.47x at the end of FY11
n Cut FY12E EPS by 11.5% due to higher interest & depreciation cost, going forward. Valuations at FY13E EV/EBIDTA of 3.2x & P/E 5.8x. Maintain BUY with TP of Rs218
16 May 2011
JPMorgan: Tulip Telecom:: Another good quarter with positive indications for FY12
Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
Another good quarter with positive indications for FY12; reiterate Overweight
• Business strength continues: Tulip Telecom in 4Q delivered sustained
revenue growth (+20% Y/Y) and expanding margins once again (+80bp
Q/Q) as the contribution from fiber ramped up nicely to 80% of new
orders. With incremental revenue streams (R-APDRP projects,
International connectivity, data centre) expected to kick in, we expect
these trends to continue, and we forecast 23% revenue growth and 1pp
margin expansion to 29.2%. Management expects the 20% revenue
growth rate of FY11 to continue in FY12, which we view as slightly
conservative.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
Another good quarter with positive indications for FY12; reiterate Overweight
• Business strength continues: Tulip Telecom in 4Q delivered sustained
revenue growth (+20% Y/Y) and expanding margins once again (+80bp
Q/Q) as the contribution from fiber ramped up nicely to 80% of new
orders. With incremental revenue streams (R-APDRP projects,
International connectivity, data centre) expected to kick in, we expect
these trends to continue, and we forecast 23% revenue growth and 1pp
margin expansion to 29.2%. Management expects the 20% revenue
growth rate of FY11 to continue in FY12, which we view as slightly
conservative.
Subscribe to:
Posts (Atom)