Hold Bharti Infratel; target of Rs 180: ICICI Direct

ICICI Direct's research report on Bharti Infratel

Bharti Infratel reported another muted performance. Revenues (on a proportionate consolidation basis) came in at Rs 3505 crore, up 3.3% QoQ with energy revenues, down 8.1% QoQ, at Rs 1262 crore. Core rental revenues came in at Rs 2243 crore, down 0.4% QoQ. The company reported net decline of 365 co-locations on a consolidated basis. EBITDA came in at Rs 1767 crore, up 4% QoQ, with EBITDA margins at 50.4% (up 355 bps QoQ). We note that Q4FY20 had one-off provision for debtors of ~Rs 193 crore, adjusting for same like to like EBITDA declined 6.6% QoQ. The EBITDA was also impacted by energy margins wherein it recorded negative margins of 2%, as the tenants have moved to pass through. Reported PAT came in at Rs 703.6 crore (up 8.3% QoQ).

Outlook

Therefore, we maintain our HOLD recommendation with a target price of Rs 180/share. Our target price implies 5x FY22E EV/EBITDA.