Hold Bharti Infratel; target of Rs 410: ICICI Direct

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

ICICI Direct's research report on Bharti Infratel

Revenues (on a proportionate consolidation basis) came in at Rs 3523.9 crore, up 9.8% YoY and flattish QoQ, slightly lower than our estimates on Rs 3543.9 crore owing to lower energy revenues that was at Rs 1264.4 crore vs. our estimate of Rs 1302 crore. Core rental revenues grew 9.8% YoY to Rs 2259.5 crore. The co-locations addition at 7795 was much ahead of our estimates of 5299, as the company remained a beneficiary of Jio’s incremental tenancy addition along with key incumbents 4G expansion led tenancy demand. The average tenancy ratio was at 2.36x (up 2.7% QoQ) EBITDA came in at Rs 1575 crore (I-direct estimate of Rs 1545 crore), up 12.9% YoY, with EBITDA margin at 44.7%, higher than expected at 43.6% boosted by higher-than-expected energy margins (4.7% vs. estimated 4%) and lower other expenses PAT came in at Rs 663.9 crore vs. our expectation of Rs 739.6 crore. The lower PAT under Ind-As was lower due to the impact of valuing investments at fair value, and resultant higher tax rates.

Outlook

We highlight that Infratel is better placed from an operating matrix, balance sheet, return ratios and cash flow/dividend yield perspective than telecom service operators who are struggling with huge leverage and increased competition. However, imminent consolidation is likely put pressure in the form of non renewals/exits of tenancy as the Idea-Vodafone combine aims to attain efficient by reducing their network duplication. While Jio expansion provides a near term fillip, loading would remain the key mode of data network expansion by incumbents, thereby restricting growth, going ahead. Moreover, a sharp run-up in the stock price of ~40% in the last five months also restricts the upside. Therefore, we maintain our HOLD recommendation with a target price of Rs 410. Possible strategic sale of Airtel stake/acquisition of Idea/Vodafone’s stake in Indus and/or subsequent improvement in capital structure through leverage could be an upside risk.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More