Hold Bharti Airtel; target Rs 417: Microsec

“Bharti’s top line increased 1.7% q-o-q to Rs 17,276.4 Crores while its bottom line declined 15.5% sequentially to Rs 1,027.0 Crores, during the quarter. The bottom line during the quarter was significantly impacted by sharp depreciation of Rs  vis-à-vis $. Consequently, it reported foreign exchange losses of Rs 239.0 Crores in Q2 FY2012. As a result, Bharti’s bottom line came below our as well as Bloomberg Consensus Estimates. Apart from foreign exchange losses, revenues remaining slightly below than expectations remained the key reason for the bottom line remaining below our estimates. Revenues lagged our estimates mainly due to lower than expected MoUs per user, which stood at 423 compared with our estimates of 430 Minutes.”

“Impact of Foreign Exchange Losses: Rs 239.0 Crores Impact of revenues remaining below expectations: Rs 235.9 Crores Difference between estimated and actual Net Income: Rs 383.5 Crores The growth in top line was primarily driven by a 1% sequential increase in net realization to 43.2 paise per minute, which more than offset 0.6% seasonal q-o-q decline in total MoUs to 250.44 Bn minutes. Furthermore, the growth in African operations supported the company’s performance. Bharti reported 7.4% increase in top line from Africa to Rs 4,703.2 Crores. The company crossed the $1 Bn revenues mark in Africa with net sales of $1.03 Bn in Q2 FY2012. In our Q1 FY2012 update report, dated 12 September 2011, we rated Bharti a HOLD with a target price of Rs 417.20 per share through EV/EBIDTA valuation methodology. With the company’s results remaining broadly in line with our estimates at EBIDTA levels, we reiterate our view and target price for the stock,” says Microsec research report.

Institutional holding more than 40% in Indian cos

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