Edelweiss Research reports on Bharti Airtel
Impressive FY07 performance reposes faith
"BHARTI reported a stellar set of results in FY07, led by strong financial performance across business segments. FY07 revenues were up 59% YoY to INR 186 billion and net profits jumped 88% Y-o-Y to INR 43 billion. Mobility business revenues grew at an exponential pace (up 72% YoY) led by accelerated annual subscriber accretions of 17.6 million even as profitability improved on account of a changing customer mix (higher share of prepaid customers) and economies of scale kicking in led by robust subscriber growth. Non-mobility segment revenues also grew at a rapid pace (up 42% YoY), led by strong growth in the carrier business and improving metrics on the broadband and enterprise services business. EBITDA margins expanded 269bps YoY to 40.1% led by improving profitability in all business segments, while net profit margins grew 353bps YoY to 22.9%."
Outlook remains robust; maintain 'BUY'
"We continue to like BHARTI as an integrated telecom operator in the intensely competitive Indian telecom market. Strong sector fundamentals point towards a robust growth outlook on the consumer access business, despite competitive pressures. We believe BHARTI's mobility business will continue to display strong performance as benefits of aggressive network expansion kick in by way of accelerated subscriber additions and economies of scale. We see continued growth traction in the non-mobility segment as well, as dependent captive carrier business tracks the robust subscriber growth trajectory."
"We are revising our FY08-09E estimates upwards on the back of improved business outlook on both mobility and non-mobility business segments, and to incorporate revised capex guidance of USD 3.5 billion for FY0-09E (vis-�-vis earlier guidance of USD 2.5 billion). We estimate overall topline to grow at a CAGR of 38% to INR 352 billion, and net profits at a CAGR of 34% to INR 76 billion over FY07-09E. At INR 853, the stock trades at an EV/EBITDA of 14.4x and 11.4x on revised FY08 and FY09 estimates respectively. on a subscriber base of 37 million, BHARTI trades at an EV/subscriber of USD 729, implying valuations at 54 months of FY08E ARPU, and 45 months of FY09E ARPU. We believe current valuations are attractive given accelerated subscriber growth metrics over FY08-09E driven by latent demand in semi-urban/rural areas on the back of a pan-India network presence. We believe BHARTI remains the default India telecom play, given its market leadership in fastest growing telecom market in the world and sustained strong financial performance across all business segments; we reiterate our 'buy' recommendation on the stock."
Impressive FY07 performance reposes faith
"BHARTI reported a stellar set of results in FY07, led by strong financial performance across business segments. FY07 revenues were up 59% YoY to INR 186 billion and net profits jumped 88% Y-o-Y to INR 43 billion. Mobility business revenues grew at an exponential pace (up 72% YoY) led by accelerated annual subscriber accretions of 17.6 million even as profitability improved on account of a changing customer mix (higher share of prepaid customers) and economies of scale kicking in led by robust subscriber growth. Non-mobility segment revenues also grew at a rapid pace (up 42% YoY), led by strong growth in the carrier business and improving metrics on the broadband and enterprise services business. EBITDA margins expanded 269bps YoY to 40.1% led by improving profitability in all business segments, while net profit margins grew 353bps YoY to 22.9%."
Outlook remains robust; maintain 'BUY'
"We continue to like BHARTI as an integrated telecom operator in the intensely competitive Indian telecom market. Strong sector fundamentals point towards a robust growth outlook on the consumer access business, despite competitive pressures. We believe BHARTI's mobility business will continue to display strong performance as benefits of aggressive network expansion kick in by way of accelerated subscriber additions and economies of scale. We see continued growth traction in the non-mobility segment as well, as dependent captive carrier business tracks the robust subscriber growth trajectory."
"We are revising our FY08-09E estimates upwards on the back of improved business outlook on both mobility and non-mobility business segments, and to incorporate revised capex guidance of USD 3.5 billion for FY0-09E (vis-�-vis earlier guidance of USD 2.5 billion). We estimate overall topline to grow at a CAGR of 38% to INR 352 billion, and net profits at a CAGR of 34% to INR 76 billion over FY07-09E. At INR 853, the stock trades at an EV/EBITDA of 14.4x and 11.4x on revised FY08 and FY09 estimates respectively. on a subscriber base of 37 million, BHARTI trades at an EV/subscriber of USD 729, implying valuations at 54 months of FY08E ARPU, and 45 months of FY09E ARPU. We believe current valuations are attractive given accelerated subscriber growth metrics over FY08-09E driven by latent demand in semi-urban/rural areas on the back of a pan-India network presence. We believe BHARTI remains the default India telecom play, given its market leadership in fastest growing telecom market in the world and sustained strong financial performance across all business segments; we reiterate our 'buy' recommendation on the stock."