Dolat Capital is bullish on Bharti Infratel has recommended buy rating on the stock with a target price of Rs 251 in its research report dated July 28, 2020.
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.
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).
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