Hold Bharti Infratel; target of Rs 285: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Bharti Infratel

Revenues (on a proportionate consolidation basis) came in at Rs 3668.3 crore, (flattish QoQ), slightly higher vs our estimates of Rs 3608 crore. The core rental declined by 3.6% YoY to Rs 2120.1 crore, while the revenues beat was largely driven by energy revenues which grew by 5% QoQ to Rs 1548.2 crore. The net co-locations exit stood at 26266, as anticipated, as the company witnessed impact of gross exits of 27769 on consolidated basis, owing to Vodafone Idea merger and also weaker tenancy addition on gross basis. The closing tenancy ratio stood at 2.04x (down from 2.22x, last quarter). EBITDA came in at Rs 1486.4 crore (Idirect estimate of Rs 1408.5 crore), down 2.2% QoQ, with margins at 40.5%(down 85 bps QoQ), but higher than with our estimates of 39.5%. The margins beat was aided by superior energy margins of 8.2% vs. our expectations of 5.5%. The company reported a PAT of Rs 599.8 crore vs. our expectation of Rs 566 crore, aided by better than expected margins.

Outlook

We believe that with final leg of consolidation pain in the form of Voda- Idea tenancy exit already done, the focus now shifts to future growth potential amid price competition among operators and Jio’s continued preference to build few towers on their own. Moreover, despite proposed merger of Indus Tower and Infratel, the basic premise of less than optimum capital structure persists. While, company’s intent to diversify into optic fibre business along with foray into additional services such as Smart City projects is a positive move, we believe benefits from the same would accrue over a longer time horizon of three to five years. Therefore, we maintain our HOLD recommendation with a revised target price of Rs 285/share. Our target price implies 9x FY20E EV/EBITDA on the merged entity Proforma financials (refer page 3).

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