Q3FY21 Result Update - Indus Towers - ICICI Direct

Indus Towers (erstwhile Bharti Infratel) reported numbers for the merged entity for the first time in Q3FY21. Therefore, numbers were not comparable to earlier reported numbers of Infratel. Like to like revenues (on a proforma basis for merged entity) came in at Rs. 6736 crore, up 5.9% QoQ led by core rental revenues which came in at Rs. 4314 crore, up 7.4% QoQ. The energy revenues came in at Rs. 2422 crore, up 3.5% QoQ, given the higher diesel prices. The rental numbers growth is optically higher as it includes exit penalty of Rs. 400.2 crore. Proforma like to like EBITDA came in at Rs. 3552 crore, up 15.6% QoQ, with EBITDA margins at 52.7% (up 440 bps QoQ) aided by exit penalty and one-time benefit of Rs. 80 crore due to merger. Like to like proforma PAT came in at Rs. 1360 crore (up 20.3% QoQ).

Valuation & Outlook

The robust tenancy addition is positive but sustainability ahead will be important. The key risk of VIL's survival seemed to have eased out after the latter's fund raise plans, albeit form of survival and long term and hence tenancy outlook will key. Furthermore, while opportunities in adjacent areas (viz. small cells/smart cities/in building solutions/active network sharing) exist, these may fructify only over the long term. We note that entity will continue to provide attractive dividend payout given the cash generation in steady state. The company also announced a dividend of Rs. 17.8/share as agreed in revised merger agreement. We maintain our HOLD recommendation with a revised target price of Rs. 245/share (earlier Rs. 220), implying 5.5x FY23E EV/EBITDA (vs. 6x FY22E EV/EBITDA, earlier).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IndusTowers_Q3FY21.pdf

Shares of Indus Towers (erstwhile Bharti Infratel) was last trading in BSE at Rs.231.7 as compared to the previous close of Rs. 241.25. The total number of shares traded during the day was 256390 in over 4952 trades.

The stock hit an intraday high of Rs. 247.9 and intraday low of 229. The net turnover during the day was Rs. 60790886.

Source : Equity Bulls

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