Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ACTION
Removed from Asia Pacific Conviction Buy List
Bharti Airtel (BRTI.BO)
Equity Research
Time for a breather? Off Conviction List on outperformance
What happened
We remove Bharti from our CL after its recent outperformance (Bharti is up
14.4% ytd outperforming Sensex by 23.3%) as we see limited upside
potential to our TP now. We believe the outperformance of Bharti was led
by: 1) improvement in regulatory environment (events like issuance of
license cancellation notices to new entrants); 2) reducing competitive
pressures with new operators/dual technology operators curtailing
aggressive offerings and operators like DoCoMo/Bharti raising headline
tariffs; 3) Media articles indicating potential IPO of Bharti Infratel (likely
leading to de-leveraging for Bharti; 4) defensive nature of the stock.
Current view
Despite Bharti’s recent outperformance, we maintain our Buy rating, as we
believe a stable India business, turnaround in Africa operations and 3G
uptake in India will likely drive the earnings upgrades (we est. FY11-14E
CAGR of 29%). However, in the near-term we see downside risks to
Bloomberg consensus estimates, as we think consensus is not fully
factoring in higher D&A, interest expenses and tax for the 1Q results
(scheduled on Aug 3). (Our annualized 1Q EPS is Rs15.63 vs. FY12
consensus est. of Rs20.57). We note that Bharti is trading at FY13 PE/EVEBITDA of 13.6X/6.6X vs. Asian telco average of 13.9X/6.0X but offers yoy
growth rate of 49% vs. Asian telcos avg. of 7% in FY13E. Bharti remains
our preferred pick in Indian telcos as we find the risk reward more
favorable for Bharti over Idea in light of potential 2G license renewal fees
linked to 3G prices. We est. the NPV of regulatory payments for Bharti to
be Rs 22/share (5.4% of CMP) and for Idea to be Rs 18/share (21.1% of
CMP). We maintain our 12-m SOTP-based target price of Rs 435.
Catalysts: 1) Potential inclusion in MSCI Index; 2) further increase in
headline tariffs; 3) value unlocking and deleveraging due to IPO/stake sale
at Bharti Infratel, Indus or at Africa towers. Risks: 1) Another round of
price wars in India. 2) Slower than expected turnaround in Africa.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Coverage View: Neutral
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ACTION
Removed from Asia Pacific Conviction Buy List
Bharti Airtel (BRTI.BO)
Equity Research
Time for a breather? Off Conviction List on outperformance
What happened
We remove Bharti from our CL after its recent outperformance (Bharti is up
14.4% ytd outperforming Sensex by 23.3%) as we see limited upside
potential to our TP now. We believe the outperformance of Bharti was led
by: 1) improvement in regulatory environment (events like issuance of
license cancellation notices to new entrants); 2) reducing competitive
pressures with new operators/dual technology operators curtailing
aggressive offerings and operators like DoCoMo/Bharti raising headline
tariffs; 3) Media articles indicating potential IPO of Bharti Infratel (likely
leading to de-leveraging for Bharti; 4) defensive nature of the stock.
Current view
Despite Bharti’s recent outperformance, we maintain our Buy rating, as we
believe a stable India business, turnaround in Africa operations and 3G
uptake in India will likely drive the earnings upgrades (we est. FY11-14E
CAGR of 29%). However, in the near-term we see downside risks to
Bloomberg consensus estimates, as we think consensus is not fully
factoring in higher D&A, interest expenses and tax for the 1Q results
(scheduled on Aug 3). (Our annualized 1Q EPS is Rs15.63 vs. FY12
consensus est. of Rs20.57). We note that Bharti is trading at FY13 PE/EVEBITDA of 13.6X/6.6X vs. Asian telco average of 13.9X/6.0X but offers yoy
growth rate of 49% vs. Asian telcos avg. of 7% in FY13E. Bharti remains
our preferred pick in Indian telcos as we find the risk reward more
favorable for Bharti over Idea in light of potential 2G license renewal fees
linked to 3G prices. We est. the NPV of regulatory payments for Bharti to
be Rs 22/share (5.4% of CMP) and for Idea to be Rs 18/share (21.1% of
CMP). We maintain our 12-m SOTP-based target price of Rs 435.
Catalysts: 1) Potential inclusion in MSCI Index; 2) further increase in
headline tariffs; 3) value unlocking and deleveraging due to IPO/stake sale
at Bharti Infratel, Indus or at Africa towers. Risks: 1) Another round of
price wars in India. 2) Slower than expected turnaround in Africa.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Coverage View: Neutral
No comments:
Post a Comment