Emkay Global Financial's report on Bharti Infratel
BHIN IN reported an EBITDA miss, primarily due to lower energy reimbursements (-8% qoq). Energy margins, which stood at -2%, surprised negatively, and were pushed downward by Indus. At the standalone level, energy margins stood at 4.8%. Gross tenancy additions of 862 was weakest in last 7 quarters. Net tenancies declined by 366 due to the exits from VIL, while the sharing factor continued to see a marked drop on a standalone basis. Management believes that the underlying business is back to normalcy after large-scale tenancy exits over the last two years. We have already baked in net tenancy addition improvement from Q2. Energy margin guidance is lowered to 0-3% from 3%.
Outlook
We continue to highlight that the stock lacks catalysts until clarity emerges on VIL’s survival. We are keeping our estimates largely unchanged, while maintaining our Sell recommendation with a revised TP of Rs153 (4x Sept’22E EBITDA). We are UW in EAP.
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