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India business saves 3QFY15 but can’t prevent forecast cuts. A disappointing 3QFY15 and subdued prognosis on Africa drive a 3-4% cut in consolidated EBITDA and 8-16% in consolidated EPS forecasts for FY2016/17E. Our India business estimates are broadly unchanged. We roll over our SOTP to Dec 2016E from Mar 2016E; upside from rollover is lost to EBITDA cuts and we cut our TP on the stock to `420 (from `430). BUY stays primarily on the back of inexpensive valuations even as Idea remains our preferred idea in the sector
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Cut EBITDA forecasts by 3-4% and EPS by 8-16% for FY2016/17E Exhibit 1 depicts the key changes to our earnings model. EBITDA cuts of 3-4% for FY2016/17E primarily reflect lowered Africa business forecasts following the sharp 3QFY15 disappointment. Our prognosis on Africa remains subdued despite management’s sustained bullish stance. As highlighted in some of our earlier notes, Africa performance continues to be weak with constant misses on progressively lower expectations. We do not know if the Bloomberg report on Orange entertaining thoughts of buying some of Bharti’s assets is just speculation or not; however, we believe it makes sense for Bharti to look at trimming its Africa operations and starting afresh. With customary disappointment on Africa displayed, we discuss the key changes to our earnings model below – We have revised our revenue estimates for FY2015-17E down by 1-4% while also reducing our consolidated EBITDA margin estimates marginally. Our revised EBITDA estimates for FY2015E, 16E and 17E stand at `311 bn, `344 bn and `382 bn respectively – a cut of 2-4%. Even as our FY2015E EPS estimates go up 3.5% to `15 on the back of below-EBITDA surprises on depreciation, net finance costs and ETR (in 3QFY15), we have cut our FY2016E and FY2017E EPS estimates by 8% and 16% to `15.6 and `17.9 respectively. We note that our EPS forecasts for FY2016E and FY2017E are optically high (marginally) on account of us not baking in the Africa tower sale impact on EBITDA, debt and interest line items while the positive impact of lower depreciation on this count are baked in given the IFRS accounting treatment on depreciation pertaining to assets held for sale. Rollover to Dec 2016E valuation aids target price, which still gets cut to `420 (from `430) We have cut our SOTP-based end-Dec 2016E target price on the stock to `420 (from `430 earlier). Our SOTP bakes in `75/share value destruction at the equity level from Africa.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily06022015mh.pdf
India business saves 3QFY15 but can’t prevent forecast cuts. A disappointing 3QFY15 and subdued prognosis on Africa drive a 3-4% cut in consolidated EBITDA and 8-16% in consolidated EPS forecasts for FY2016/17E. Our India business estimates are broadly unchanged. We roll over our SOTP to Dec 2016E from Mar 2016E; upside from rollover is lost to EBITDA cuts and we cut our TP on the stock to `420 (from `430). BUY stays primarily on the back of inexpensive valuations even as Idea remains our preferred idea in the sector
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Cut EBITDA forecasts by 3-4% and EPS by 8-16% for FY2016/17E Exhibit 1 depicts the key changes to our earnings model. EBITDA cuts of 3-4% for FY2016/17E primarily reflect lowered Africa business forecasts following the sharp 3QFY15 disappointment. Our prognosis on Africa remains subdued despite management’s sustained bullish stance. As highlighted in some of our earlier notes, Africa performance continues to be weak with constant misses on progressively lower expectations. We do not know if the Bloomberg report on Orange entertaining thoughts of buying some of Bharti’s assets is just speculation or not; however, we believe it makes sense for Bharti to look at trimming its Africa operations and starting afresh. With customary disappointment on Africa displayed, we discuss the key changes to our earnings model below – We have revised our revenue estimates for FY2015-17E down by 1-4% while also reducing our consolidated EBITDA margin estimates marginally. Our revised EBITDA estimates for FY2015E, 16E and 17E stand at `311 bn, `344 bn and `382 bn respectively – a cut of 2-4%. Even as our FY2015E EPS estimates go up 3.5% to `15 on the back of below-EBITDA surprises on depreciation, net finance costs and ETR (in 3QFY15), we have cut our FY2016E and FY2017E EPS estimates by 8% and 16% to `15.6 and `17.9 respectively. We note that our EPS forecasts for FY2016E and FY2017E are optically high (marginally) on account of us not baking in the Africa tower sale impact on EBITDA, debt and interest line items while the positive impact of lower depreciation on this count are baked in given the IFRS accounting treatment on depreciation pertaining to assets held for sale. Rollover to Dec 2016E valuation aids target price, which still gets cut to `420 (from `430) We have cut our SOTP-based end-Dec 2016E target price on the stock to `420 (from `430 earlier). Our SOTP bakes in `75/share value destruction at the equity level from Africa.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily06022015mh.pdf
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