Indus Towers (erstwhile Bharti Infratel) - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 241; MCap: Rs. 65015 crore)

Indus Tower reported numbers for the merged entity for the first time in Q3FY21. Therefore, numbers were not comparable to earlier reported numbers of Infratel. Nevertheless, on Proforma basis, like to like tenant addition, rental revenues as well as margins were better than expected.

Q3FY21 Earnings Summary

- Like to Like Revenues (on a proforma basis for merged entity) came in at Rs. 6736 crore, up 5.9% QoQ and higher than our expectations of Rs. 6387 crore, owing to higher core rental revenues which came in at Rs. 4314 crore, up 7.4% QoQ vs. our expectations of Rs. 4070 crore. The energy revenues came in at Rs. 2422 crore, up 3.5% QoQ, given the higher diesel prices. The numbers rental numbers growth is optically higher as it includes exit penalty of Rs. 400.2 crore. The revenues would also have been lower but for extended occupation of exiting tenant (~4474 collocations where actual exits yet to happen despite exit notice). The company reported net addition of 4204 co-locations (~4558 on gross basis) vs. expectations of 2500 addition

- 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) vs. expectations of 50.5% owing better revenues and lower other expenses.

- Like to Like Proforma PAT came in higher than estimates at Rs. 1360 crore (up 20.3% QoQ) vs. expectations of Rs. 1180 crore, given the overall superior operating performance.

The tenancy addition momentum remains much better than declines seen in FY20 and is therefore, comforting. Vodafone Idea fund raising plans does allows for survival for its near term at least (and hence no near term tenancy exits shock for Indus). The long term tenancy growth outlook, however, will be key along with its planned foray in allied activities such as smart cities or fibre etc. We seek management commentary on growth outlook and recovery. We will come out with an update post the conference call.

Shares of BHARTI INFRATEL LTD. was last trading in BSE at Rs.242.75 as compared to the previous close of Rs. 238.55. The total number of shares traded during the day was 172833 in over 3061 trades.

The stock hit an intraday high of Rs. 243.65 and intraday low of 232.1. The net turnover during the day was Rs. 41577659.

Source : Equity Bulls

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