Indus Towers Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Revenues (on a proportionate consolidation basis) came in at | 3668.3 crore, (flattish QoQ), slightly higher vs our estimates of | 3608 crore. The core rental declined by 3.6% YoY to | 2120.1 crore, while the revenues beat was largely driven by energy revenues which grew by 5% QoQ to | 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...

BUY with TP of Rs 321 @ 25x Sep-20E EPS (for merged entity). Exit penalty from Voda-Idea would be additional upside (~Rs 8/sh) or Rs 15bn. Bharti Infratels (BHIN) 2QFY19 results were marginally better. BHIN rental revenue/EBITDA/PAT was -6%/-8%/-6% YoY. As expected, operating performance was weak. BHIN witnessed churn of ~28k tenancies (55k including 100% of Indus) owing to Voda-Idea merger.

Bharti Infratel notified the stock exchanges that on account of consummation of Vodafone India and Idea Cellular merger, the company have received exit notices for 27,447 co-locations on the consolidated basis. The tenancies formed 13.7% of the overall tenancies for the company. The company guided for |60-65 crore impact per month (|720780 crore/annum). We note that we had built in tenancies exit of ~25000 spread over FY19 and FY20, as guided by the management earlier. Given the front loaded one-time exit, we now lower our estimates of FY19E and FY20E further. While, the Voda-Idea exit is the last leg of tenancy hit that...

EBITDA margins fell 333bps YoY due to reduction in energy margins. As a result PAT de-grew by 3.5% YoY. Merger between Indus & BHIN is likely to be complete by FY19. It will be a value accretive for BHIN in terms of opex synergy and saving on double taxation impact of dividend distribution tax....

Other income fell 22% to Rs 36.10 crore. Interest income stood at Rs 87.70 crore against Rs 29.20 crore. Depreciation fell 5% to Rs 276.80 crore. Thus PBT grew 7% to Rs 612.90 crore. Share of profit in JV fell 10% to Rs 296.60 crore. Thus PBT after Share of profit in JV grew 1% to Rs 909.50 crore. EO loss was Rs 26 crore against NIL....

Other income fell 22% to Rs 36.10 crore. Interest income stood at Rs 87.70 crore against Rs 29.20 crore. Depreciation fell 5% to Rs 276.80 crore. Thus PBT grew 7% to Rs 612.90 crore. Share of profit in JV fell 10% to Rs 296.60 crore. Thus PBT after Share of profit in JV grew 1% to Rs 909.50 crore. EO loss was Rs 26 crore against NIL....

Revenue rose by 1.45% to Rs. 1697.0 Cr in Q1FY19 when compared to the previous quarter. Bharti Infratel Ltd Q1FY19 results Comment

We maintain Neutral on BHIN (after upgrading from Sell in 4QFY18) as (a) stock has corrected by ~40% from peak (b) on account of savings on DDT and earnings accretion from Indus acquisition and (c) prognosis for rental renegotiations though a risk but weak. Bharti Infratels (BHIN) 1QFY19 operating performance was weak with 4,818 net tenancy losses. Gross tenancy additions too were weak at meager 838. BHIN has lost 19k net tenancies in last three quarters. But, BHIN is yet to see the impact of ~6.7k tenancy loss on financials as it has received termination notices but services continue. Thus, revenue and EBITDA were better than expected.

ICICI Securities Ltd | Retail Equity Research Revenues (on a proportionate consolidation basis) were at | 3673.5 crore, (up 0.3% QoQ), slightly higher than our estimate of | 3623 crore. Core rental was up 0.6% YoY to | 2198.9 crore, higher than our estimate of | 2142 crore, while energy revenues were flattish at | 1474.6 crore vs. our expectation of | 1481 crore. Net co-locations exit at 4818 was higher than our anticipated net exits estimate of 4000, as the company witnessed the impact of gross exits of 5676 on...

Bharti Infratel (Infratel), on 25th April, 2018 announced its merger with Indus Towers (Indus) creating a Pan-India leading tower companies with 163162 towers and 367073 tenancies. The share swap is 1,565 shares of Bharti Infratel for every 1 Indus Towers share. The merger implies Indus enterprise value of ~| 71500 crore (equity valuation of | 67600), which is 9.3x TTM EV/EBITDA. We highlight that implied valuation of Indus is slightly lower than our target valuation of | 69,600 crore for Indus. The merger envisages complete exit of Idea Cellular's 11.15% stake in...