Hold Bharti Infratel; target of Rs 275: ICICI Direct

ICICI Direct recommended hold rating on Bharti Infratel with a target price of Rs 275 in its research report dated July 26, 2019.

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July 30, 2019 / 12:41 IST

26 Aug, 2025 12:21

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ICICI Direct's research report on Bharti Infratel

Bharti Infratel’s Q1FY20 performance was weak on a like top like basis, albeit exit penalty and Ind-AS 116 adoption resulted in superior operating level reported numbers. Revenues (on a proportionate consolidation basis) came in at Rs 3711.9 crore, better than our estimate of Rs 3558 crore, aided by implementation of Ind-AS 116 (revenue equalisation) and extended occupation of exiting tenants (~3566 collocations where actual exits yet to happen despite exit notice). Reported core rental revenues came in at Rs 2182 crore, up 3.5% YoY (vs. our expectation of Rs 2065 crore). The company reported net increase of 523 co-locations on a consolidated basis vs. our expectations of net loss of 1,750 tenancies. EBITDA (without impact of Ind-AS 116) came in at Rs 1557.2 crore (our estimate of Rs 1423.7 crore), up 4.4% QoQ, with EBITDA margins at 42.9% (up 150 bps QoQ), against our estimate of 40%). Reported EBITDA (without impact of Ind-As 116) was better on account of operating cost provision reversal of ~Rs 125 crore. Reported EBITDA margins at 51.1% was higher owing to Ind-AS impact.

Outlook

Therefore, we maintain our HOLD recommendation with a target price of Rs 275/share. Our target price implies 6.5x FY21E EV/EBITDA on the merged entity proforma financials.

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