Dear All,
Forwarding you the Result Update on Bharti Airtel for 4QFY2011 with an Accumulate recommendation and a Target Price of `398 (12 months).
For 4QFY2011, Bharti Airtel’s (Bharti) revenue came in marginally lower than street as well as our expectations. However, on the PAT front, the company underperformed the expectations by a wide margin. During FY2011, Bharti has demonstrated strong resilience even in the midst of such a hyper-competitive environment. We recommend Accumulate on the stock.
Result highlights: Bharti’s consolidated revenue stood at `16,265cr, reporting 3.2% qoq growth. Revenue from mobile business –India and South Asia – came in at `9,495cr on the back of qoq maintained MOU at 449min. ARPM for India business witnessed a dip of 2.4% qoq to `0.43/min. Zain Africa’s contribution came in lower at `4,182cr due to MOU slipping by 4.0% qoq to 115min, whereas ARPM inching up to 6.2US¢/min. On the operating front, EBITDA margin of the mobile business – India and South Asia – declined by 164bp qoq to 33.3%, whereas telemedia and enterprise posted a 58bp qoq and 421bp qoq increase in EBITDA margin to 45.2% and 25.7%, respectively. Mobile Africa business also posted a 160bp expansion in EBITDA margin to 26.4%. Consolidated EBITDA margin for Bharti stood at 33.5%, registering an expansion of 185bp qoq. PAT came in lower at `1,401cr due to poor net profitability of Africa operations due to higher depreciation expenses.
Outlook and valuation: Bharti is on the course to turnaround its Africa business by bringing down network operating expenditure by outsourcing various network-related works. In addition, out of the 13 circles, the company has launched 3G in 9 circles already. Further, as per preliminary MNP data, the company has proved to be the second-highest net gainer for port-in request, gaining ~0.5mn subscribers until April 2011. We expect Bharti’s Indian and Africa mobile subscriber base to grow at a 16.6% CAGR each over FY2011–13E to 221mn and 60mn subscribers, respectively. We recommend Accumulate with a target price of `398, valuing Bharti at EV/EBITDA of 7x FY2013E EBITDA.
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If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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