Buy Bharti Infratel; target of Rs 251: Dolat Capital

Dolat Capital's research report on Bharti Infratel

Bharti Infratel (BHIN) Q1FY21 was marginally weak on account of negative energy spread and lower exit revenue. Consolidated tower additions (BHIN+42% of Indus) was at 430. New tenant’s additions were negative at 366. This we believe due to lower gross additions of new tenant on account of Covid. Rental/tenant declined by 0.6% QoQ l mainly due lower exit revenues. BHIN declared dividend of Rs 2.3 (Rs 10.5 for FY20, ~5.5% yield). BHIN’s story lack growth with risk of reduction in tenancies (low probability) and rentals/tenant (mid-to-high); though cash flows and dividend yield is healthy (~6%) and thus likely to cap downside. We foresee the risk of VIL closure a low-probability event with Govt backing in the court.

Outlook

We increase our target multiple for BHIN to 15x from 12x to factor the above and broader market re-rating. Reiterate BUY with revised TP of Rs 251 @ 15x FY22E EPS (earlier Rs 220 @ 12x).

Bharti Infratel 29072020-dolat

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