Bharti Airtel 4Q FY 2013

4QFY2013 Result Update | Telecom
May 3, 2013
Bharti Airtel
Performance highlights
(` cr) Net sales EBITDA EBITDA margin (%) PAT 4QFY13 20,460 6,487 31.7 509 3QFY13 20,254 6,184 30.5 284 % chg (qoq) 1.0 4.9 117bp 79.3 4QFY12 18,739 6,233 33.3 1,006 % chg (yoy) 9.2 4.1 (156)bp (49.4)
ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Telecom 120,650 63,840 0.8 370/238 483,952 5 19,576 5,944 BRTI.BO BHARTI.IN
`318 `338
12 Months
Source: Company, Angel Research
For 4QFY2013, Bharti Airtel (Bharti)s revenue as well as bottom-line came in below expectations while operating margin performance surprised positively. The company is now hopeful regarding its domestic operations as mobile operators have increased tariffs and cut freebies after a bruising three-year price war. Africa operations are expected to continue to weigh upon the companys performance. We maintain our Accumulate rating on the stock. Result highlights: For 4QFY2013, Bhartis consolidated revenue stood at `20,460cr, up 1.0% qoq. KPIs for India mobile business were encouraging with MOU growing by 4.8% to 455min and 5.1% qoq rise in network traffic. The ARPM declined slightly by 0.5% to 42.3paise/min. In Africa business, the company posted a 14.2% qoq decline in MOU to 123min and ARPM declined by 5% qoq. The consolidated EBITDA margin of the company grew by 117bp qoq to 31.7%, led by expansion in margins in its domestic business segments. PAT came in at `509cr, down 50% yoy. Profitability was hit due to higher tax expense with tax rate coming in at ~61% and higher finance cost (`203cr forex loss). Outlook and valuation: The company cited that despite the fact that the number of major telecom players has fallen from more than a dozen to just seven, significant competition still prevails in the domestic market as promotions, and discount packs for customers have continue. Going ahead, we believe sustained RPM improvement would be imperative for a turnaround in the India mobile business as mobile traffic growth is already subdued and data revenue is yet to contribute significantly. We factor in an ARPM increase of 2.5paise in FY2014E. Bharti is on its way to turnaround its Africa business by bringing down its network operating expenditure by outsourcing various network-related developments, but is taking longer than expected to bring the business back on track. The Management is confident that the worst is over in Africa and margin improvement and FCF generation remain the key focus areas in this business as major investments are behind. The stock is currently trading at 5.4x FY2015E EV/EBITDA and 21.8x FY2015E EPS. We maintain our Accumulate rating on the stock. The SOTP based valuation method prices the stock at `338. Key financials (Consolidated, IFRS)
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x) FY2011 59,467 42.1 6,035 (33.7) 33.7 15.9 20.0 2.5 12.4 8.2 3.0 9.0 FY2012 71,475 20.2 4,261 (29.4) 33.2 11.2 28.3 2.4 8.4 8.1 2.6 7.8 FY2013E 80,359 12.4 2,297 (46.1) 30.9 6.0 53.0 2.4 4.6 7.0 2.3 7.4 FY2014E 86,592 7.8 4,140 80.2 31.4 10.9 29.1 2.2 7.7 7.7 2.0 6.5 FY2015E 95,860 10.7 5,522 33.4 31.7 14.5 21.8 2.0 9.3 9.3 1.7 5.4
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 68.6 8.6 17.2 5.6
Abs. (%) Sensex Bharti Airtel
3m 14.1 0.8
1yr (1.0) (3.9)
3yr 12.6 7.0
Ankita Somani
022-39357800 Ext: 6819 ankita.somani@angelbroking.com
Please refer to important disclosures at the end of this report
Bharti Airtel | 4QFY2013 Result Update
Exhibit 1: 4QFY2013 Financial performance (Standalone, Indian GAAP)

(` cr) Net sales Access charges License fees and spectrum charges Employee costs Other expenses Total operating expenses as % to sales EBITDA Depreciation and amortization EBIT Interest cost Other income PBT Tax PAT EBITDA margin EBIT margin PAT margin
4QFY13 11,548 1,832 1,235 405 4,587 8,060 69.8 3,489 1,757 1,732 281 92 1,543 459 1,084 30.2 15.0 9.4
3QFY13 11,299 1,949 1,204 386 4,585 8,124 71.9 3,176 1,738 1,438 490 45 993 243 750 28.1 12.7 6.6
% chg (qoq) 2.2 (6.0) 2.6 5.1 0.0 (0.8) 9.9 1.1 20.5 (42.7) 55.4 89.1 44.5 211bp 228bp 275bp
4QFY12 10,757 1,537 1,223 337 4,152 7,248 67.4 3,510 1,535 1,974 310 186 1,850 276 1,574 32.6 18.4 14.6
% chg (yoy) 7.4 19.2 1.0 20.4 10.5 11.2 (0.6) 14.4 (12.3) (9.5) (16.6) 66.1 (31.1) (241)bp (336)bp (525)bp
FY2013 45,351 7,421 4,882 1,511 18,066 31,880 70.3 13,471 6,827 6,644 1,652 1,463 6,455 1,359 5,096 29.7 14.7 11.2
FY2012 41,604 5,809 4,694 1,392 16,066 27,960 67.2 13,644 5,916 7,728 1,396 625 6,956 1,226 5,730 32.8 18.6 13.8
% chg (yoy) 9.0 27.8 4.0 8.6 12.5 14.0 (1.3) 15.4 (14.0) 18.3 (7.2) 10.8 (11.1) (309)bp (392)bp (254)bp
Modest domestic business performance: For 4QFY2013, Bharti reported 1.0% sequential growth in revenues to `20,460cr, with growth primarily being led by India and South Asia mobile business.
Exhibit 2: Revenue break-up (Business segment wise)

Business segment (` cr) Mobile services India & South Asia Mobile services Africa Telemedia services Enterprise services Passive infrastructure services Others Eliminations Net revenue
4QFY13 3QFY13 % chg (qoq) 4QFY13 % chg (yoy) 11,285 5,897 962 1,314 2,719 540 2,257 20,460 10,936 5,972 957 1,422 2,635 520 2,189 20,253 3.2 (1.3) 0.6 (7.6) 3.2 3.7 3.1 1.0 10,510 5,308 916 1,121 2,418 440 1,974 18,739 7.4 11.1 5.0 17.3 12.4 22.7 14.3 9.2
May 3, 2013
Mobile business India and South Asia: The revenue of the mobile business in India and South Asia grew by 3.2% qoq to `11,285cr. The Indian mobility business reported healthy KPIs with 4.8% qoq growth in minutes of usage (MOU) to 455min. Mobile traffic grew by 5.1% qoq to 253bn min. The overall as well as voice average revenue per minute (ARPM) declined by 0.5% qoq each to `0.42/min and `0.35/min, respectively. Consequently, the overall as well as voice ARPU grew by 4.2% and 4.3% qoq to `193/month and `159/month. The churn level has come back to a comfortable position after eight quarters and stood at 3.2%. The subscriber base grew to 188.2mn from 181.9mn in 3QFY2013, a net addition of ~6.3mn subscribers. VAS as a percentage of mobility revenue inched up slightly to 17.4% from 17.3% during 3QFY2013. The growth in non-voice revenues was led by growth in data revenue, which grew from 5.7% to 6.5% of total mobile revenues. Data ARPU increased to `55 from `47 in 3QFY2013. The data customer base of the company increased by 4.8% qoq to 43.5mn. Data usage per subscriber increased to 187MB from 161MB in 3QFY2013. The companys data revenue has been growing at a CQGR of ~12.5% over the last four quarters, which is an encouraging sign.
Exhibit 3: Trend in MOU (qoq)

460 450 440 2.8 4.4 4.8 6 4 2
Exhibit 4: Trend in VAS share (qoq)

18
17
17.3 16.8 16.2 15.8 16.3
17.4
(min)
(%)
420 410
(1.0) (3.8)
(2)
(%)
16 16.1 15 2QFY12 3QFY12 4QFY12 1QFY13 VAS share
430
0.4
423
419
431
433
417
390 MoU
435
(4.9)
455
400
(4) (6)
2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 qoq growth
2QFY13
3QFY13
4QFY13
Exhibit 5: Trend in ARPM (qoq)

0.50 3.2 0.45 4 3 2
Exhibit 6: Trend in ARPU (qoq)

200 190 4.3 2.2 1.1 (2.2) 4.3 8
( ` /month)
( ` /min)
0.40
(0.2)
(0.1)
(0.5) 0 (1)
170 160 150
0.35
0.43
0.45
0.44
0.43
0.43
0.43
0.42
(1.7)
183
187
189
185
177
185
0.30 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 ARPM qoq growth
(3)
193
(2.6)
(2)
(3.8)
(3.9)
(4)
(8) 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 ARPU qoq growth
May 3, 2013
(%)
0.9
(%)
180
Telemedia services: The revenue of the telemedia business increased by just 0.6% qoq to `962cr, led by an improvement in APRU to `978/month from `973/month in 3QFY2013. Bhartis subscriber base in this business reported a net addition of 4,695 subscribers to 3.3mn. The EBITDA margin on this business remained almost flat qoq to 43.6%.
Exhibit 7: Telemedia Subscriber base and ARPU trend

3,500 3,300 (in 000's) 3,100 2,900 2,700 2,500 850 3,328 3,317 3,270 3,272 3,275 3,278 3,283 955 933 916 962 971 973 978 1000
950
900
800
2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 Telemedia subscribers (in 000's )
ARPU
Passive infrastructure services: The revenues in the passive infrastructure services segment grew by 3.2% to `2,719cr. Bharti Infratel has a portfolio of ~33,120 towers with a tenancy ratio of 1.81x and Indus Towers has a portfolio of ~111,820 towers (111,241 in 3QFY2013) with a tenancy ratio of 1.99x. EBITDA grew by 6.9% qoq to `1,044cr with EBITDA margin growing by 134bp qoq to 38.4%.
Exhibit 8: Trend in Passive Infrastructure Business (qoq)

1,200 1.89
No. of towers (in 00's)
2.2 1.91 1.94 1.96 1.98 1.99 1.99 2.0 1.8
900 1.79 1.81 1.82 1.82 1.81 1.82 1.81 1.6 1.4 300 1.2 0 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 Bharti Infratel (BTIL) Indus BTIL tenancy Indus tenancy 1.0
Tenancy (x)
600
India & South Asia capex during the quarter stood at `2,254cr vs `1,515cr in 3QFY2013. Full year FY2013 capex for India & South Asia business stood at `9,596cr vs `6,415cr in FY2012.
May 3, 2013
(`)
Exhibit 9: 4QFY2013 Financial performance (Consolidated, IFRS)

(` cr) Net revenue Operating expenditure EBITDA Depreciation & amortization EBIT Interest charges Non operating expenditure Other income PBT Income tax PAT Share in earnings of associate Minority Interest Adj. PAT EPS (`) EBITDA margin (%) EBIT margin (%) PAT margin (%)
4QFY13 20,460 13,973 6,487 3,983 2,504 1,210 1,295 788 507 (2) 509 1.3 31.7 12.2 2.5
3QFY13 20,254 14,070 6,184 3,901 2,283 1,332 951 668 284 0 284 0.7 30.5 11.3 1.4
% chg (qoq) 1.0 (0.7) 4.9 2.1 9.7 (9.2) 36.1 18.1 78.4 (800.0) 79.3 79.4 117bp 97bp 109bp
4QFY12 18,739 12,506 6,233 3,468 2,765 1,057 1,707 698 1,010 (2) 2 1,006 2.6 33.3 14.8 5.4
% chg (yoy) 9.2 11.7 4.1 14.8 (9.4) 14.4 (24.2) 13.0 (49.8) (200.0) (49.4) (49.4) (156)bp (251)bp (288)bp
FY2013 80,359 55,489 24,870 15,496 9,374 4,384 4,990 2,715 2,275 (23) 2,297 6.0 30.9 11.7 2.9
FY2012 71,475 47,762 23,712 13,368 10,344 3,819 6,526 2,260 4,265 (6) (1) 4,261 11.2 33.2 14.5 6.0
% chg (yoy) 12.4 16.2 4.9 15.9 (9.4) 14.8 (23.5) 20.1 (46.7) 1,630.8 (46.1) (46.5) (223)bp (281)bp (310)bp
Exhibit 10: Actual vs Angel estimates

(` cr) Net sales EBITDA margin (%) PAT
Actual 20,460 31.7 509
Estimate 20,631 29.7 532
% Var. (0.8) 201bp (4.4)
Mobile Africa business: For 4QFY2013, Zain Africas revenue stood at `5,897cr, down 1.3% qoq. In USD terms, the revenue declined by 1.1% qoq to US$1,120mn, as KPIs of Africa business remained under pressure. MOU declined considerably by 14.2% qoq to 123min. The ARPU declined by 4.9% qoq to US$5.9/month. The EBITDA during the quarter declined by 5.1% qoq at `1,501cr, primarily due to higher network opex and weak KPIs. The EBITDA margin declined by 103bp qoq to 25.5%. The capex during the quarter stood at `1,269cr vs `867cr in 3QFY2013. Full year FY2013 capex for Africa business stood at `3,940cr vs `7,166cr in FY2012.
Exhibit 11: Operating metrics for Zain Africa

4QFY13 ARPM (US/min) MOU (min) ARPU (US$/month) Subscriber base (mn)
3QFY13 4.3 144 6.2 61.7
% chg qoq 10.8 (14.2) (4.9) 3.3
4QFY12 5.6 122 6.8 53.1
% chg yoy (14.3) 1.2 (13.3) 19.9
4.8 123 5.9 63.7
May 3, 2013
Consolidated margins improve

During the quarter, Bhartis consolidated EBITDA margin increased by 117bp qoq to 31.7%. This was on the back of healthy performance in domestic businesses. Segment-wise, the EBITDA margin of India & South Asia mobility business and infrastructure services grew by 100bp and 134bp qoq to 31.3% and 38.4%, respectively. Africa margins declined by 103bp qoq to 25.5%. The EBITDA margin of other business segments such as enterprise services grew by 630bp qoq to 22.5%, while margin of telemedia business remained almost flat qoq at 43.6%. While the operating performance of India mobile business was satisfactory, the Africa business surprised negatively, impacted by several macro and countryspecific issues. The Management is confident that the worst is over in Africa and margin improvement and FCF generation remain the key focus areas in Africa as major investments are behind.
Exhibit 12: Segment-wise EBITDA margin trend (qoq)

50 38.8 37.3 33.8 41.0 38.6 34.0 30.3 16.5 16.9 3QFY12 14.6 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 40.3 42.4 43.5 43.6 38.4 36.5 37.5 31.0 15.4 37.0 30.3 16.2 31.3 22.5
40
(%)
30
20
10
Mobile services-India & South Asia Enterprise services

Telemedia services Passive infrastructure services
Exhibit 13: Opex break-up (qoq)

100 80 60 32.2 33.3 30.2 31.3 30.5 31.7
17.7 8.4 22.8 14.2 3QFY12

4.7
16.9 8.6 22.6 13.9 4QFY12 Network costs

4.7
18.3 8.4 24.0 14.3 1QFY13 License fee

4.8
17.3 8.1 23.3 15.1 2QFY13 Employee cost

4.9
16.2 8.2 24.9 15.0 3QFY13 S,G&A cost

5.0
15.5 8.2 25.3 13.9 4QFY13 EBITDA margin

5.3
(%)
40 20 0
Access charges
May 3, 2013
Outlook and valuation

The company cited that despite the fact that the number of major telecom players has fallen from more than a dozen to just seven, due to a Supreme Court ruling that scrapped the licenses of a number of smaller firms due to a scandal-tarnished sale, significant competition still prevails in the domestic market as promotions and discount packs for customers continue. Going ahead, we are positive on the companys Indian operations and expect tariffs to inch up. Reduction in channel payouts and pricing improvement would provide margin cushion going forward. However, many regulatory issues still lack clarity. Bhartis data revenue has been growing at a CQGR of ~12.5% over the last four quarters which is an encouraging sign. We believe sustained RPM improvement would be imperative for a turnaround in the India mobile business as mobile traffic growth is already subdued and data revenue is yet to contribute significantly. We factor in an ARPM increase of 2.5paise in FY2014E. Bharti is on its way to turnaround its Africa business by bringing down its network operating expenditure by outsourcing various network-related developments but is taking longer than expected to bring the business back on track. Overall industry growth in Africa has come down to 8-9% vs 14-15% when the Management took over Zain in 2010, which led to deviation in the Managements initial guidance of US$5bn revenue and US$2bn EBITDA. The Management is confident that the worst is over in Africa and margin improvement and FCF generation remain the key focus areas in Africa as major investments are behind. Going ahead, in the near term, elevated costs and pricing pressure in Africa might weigh upon Bhartis performance. But the Management indicated that a potential recovery, with double-digit growth in Nigeria (aided by regulatory intervention) and Anglophone markets, even as Central African and Francophone markets stabilize, will lead to improvement in Africa business performance. Along with this, recent regulatory measures in Nigeria such as - a cut in termination charges by 40%, costlier on-net calls for MTN, and MNP - would help Bharti Airtel in Africa as Nigeria contributes ~1/3rd to Bharti Africa revenues. While operationally the performance in 4QFY2013 was in line on the revenue front, regulatory issues still persist. Apart from this, higher debt, interest costs and forex risks pose a risk to the earnings. We expect Bharti to post a revenue CAGR of 9.2% over FY2013-15E. In addition, we expect VAS share to inch up due to surging demand for non-SMS data services; this would further comfort the companys ARPM. Key downside risks such as 1) uncertainty in regulatory outcome; 2) pricing scenario in Africa operations; and 3) delay in return on investments made in 3G launches, still loom. Emerging regulatory clarity in the sector would be positive for the sector in the medium to long term. Bharti being the leader in the industry would be the key beneficiary of the same. The stock is currently trading at 5.4x FY2015E EV/EBITDA and 21.8x FY2015E EPS. We maintain our Accumulate rating on the stock. The SOTP based valuation method prices the stock at `338.
May 3, 2013
Exhibit 14: SOTP valuation

Particulars Domestic business (excl. Tower) Zain - Africa operations Bharti Infratel - Tower business Target price (`)
Parameter (FY2015E) 14x P/E 7x EV/EBITDA 25% discount to CMP
Value/Share (`) 274 12 52 338
Exhibit 15: One-year forward EV/EBITDA (x)

350,000 300,000 250,000
EV (` cr)
200,000 150,000 100,000 50,000 0
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Aug-07
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Dec-12
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
EV
12x
10x
8x
6x
4x
Exhibit 16: Change in estimates

FY2014 Parameter (` cr) Net revenue EBITDA PBT Tax PAT Earlier estimates 86,933 26,292 6,005 2,102 3,903 Revised estimates 86,592 27,222 6,369 2,229 4,140 Variation (%) (0.4) 3.5 6.1 6.1 6.1 Earlier estimates 96,121 30,006 9,150 3,203 5,948 FY2015 Revised estimates 95,860 30,435 8,629 3,106 5,522 Variation (%) (0.3) 1.4 (5.7) (3.0) (7.1)
Exhibit 17: Recommendation summary

Company Bharti Airtel Idea Cellular RCom Reco. Accumulate Neutral Neutral CMP (`) 318 135 110 Tgt. price (`) 338 135 110 Upside (%) 6.4 FY2015E P/BV (x) 2.0 2.6 0.6 FY2015E P/E (x) 21.8 28.3 17.1 FY2012-15E EPS CAGR (%) 9.0 29.5 17.4 FY2015E RoCE (%) 9.3 10.4 4.8 FY2015E RoE (%) 9.3 9.1 3.4
May 3, 2013
Apr-13
Company Background
Bharti Airtel is India's leading telecommunication service provider, offering mobile services in all the 22 circles of the country and having a subscriber base of 181mn. In 2010, Bharti acquired Zain's telecom business in 15 countries of Africa and is currently present in 17 African countries (62mn subscribers). The company also has a presence in Sri Lanka and Bangladesh. Bharti also holds a 42% stake in Indus Towers, a JV between Bharti, Vodafone and Idea Cellular.
May 3, 2013
Profit and Loss account (Consolidated, IFRS)

Y/E March (` cr) Net sales Roaming and access charges % of net sales Network operating exp. % of net sales License fee % of net sales Other expenses Total expenditure % of net sales EBITDA % of net sales Dep. and amortization Non operating expenses EBIT Interest charges Other income, net Profit before tax Provision for tax % of PBT PAT Share in earnings of associate Minority interest Adj. PAT EPS (`) FY2011 59,467 7,499 12.6 12,993 21.8 5,166 8.7 13,774 39,432 66.3 20,035 33.7 10,206 111 9,719 2,182 129 7,666 1,778 23.2 5,887 (148) 6,035 15.9 FY2012 71,475 9,869 13.8 16,180 22.6 6,112 8.6 15,602 47,762 66.8 23,712 33.2 13,368 10,344 3,819 6,526 2,260 34.6 4,265 (6) (1) 4,261 11.2 FY2013E 80,359 11,733 14.6 19,588 24.4 6,619 8.2 17,550 55,489 69.1 24,870 30.9 15,496 9,374 4,384 4,990 2,715 54.4 2,275 (23) 2,297 6.0 FY2014E 86,592 12,411 14.3 21,729 25.1 7,322 8.5 17,909 59,371 68.6 27,222 31.4 16,712 10,509 4,140 6,369 2,229 35.0 4,140 4,140 10.9 FY2015E 95,860 14,060 14.7 22,897 23.9 8,153 8.5 20,316 65,426 68.3 30,435 31.7 17,968 12,467 3,838 8,629 3,106 36.0 5,522 5,522 14.5
May 3, 2013
10
Balance sheet (Consolidated, IFRS)

Y/E March (` cr) Liabilities Share capital Reserves and surplus Tot. shareholders funds Minority interest Secured loans Unsecured loans Total debt Other liabilities Total liabilities Assets Gross block Acc. depreciation Net block Goodwill Oth. non-current assets Investments Inventories Sundry debtors Cash and equivalents Other current asst Total current assets Less: - current liab. Less:- provisions Net current assets Net deferred tax Miscellaneous exp. Total assets 96,810 31,668 65,142 63,732 1,918 622 214 5,493 958 3,921 10,585 28,430 118 (17,962) 4,506 117,959 112,529 45,036 67,493 66,089 3,543 1,813 131 6,374 2,030 4,461 12,995 29,450 129 (16,584) 5,128 127,482 1,899 46,868 48,767 2,856 53,234 8,437 61,671 4,665 117,959 1,899 48,713 50,611 2,770 49,715 19,308 69,023 5,078 127,482 1,899 48,423 50,322 4,089 61,548 11,412 72,961 6,322 133,693 117,636 48,793 68,843 68,081 4,185 6,745 111 6,643 1,730 5,062 13,545 33,446 184 (20,085) 5,925 133,693 126,636 65,505 61,578 68,081 5,185 9,245 200 8,117 5,915 8,062 22,294 35,785 184 (13,675) 5,925 136,339 135,636 83,473 52,163 68,081 6,185 11,745 200 8,879 9,497 11,062 29,637 39,435 184 (9,981) 5,925 134,117 1,899 52,119 54,017 4,089 58,329 13,582 71,911 6,322 136,339 1,899 57,197 59,095 4,089 46,962 17,649 64,611 6,322 134,117 FY2011 FY2012 FY2013E FY2014E FY2015E
May 3, 2013
11
Cash flow statement (Consolidated, IFRS)

Y/E March (` cr) Pretax profit from operations Depreciation Expenses (deferred)/written off Pre tax cash from operations Other income/prior period ad Net cash from operations Tax Cash profits (Inc)/Dec in Current assets Current liabilities Net trade working capital Cash flow from oper. actv. (Inc)/Dec in fixed assets (Inc)/Dec in intangibles (Inc)/Dec in investments (Inc)/Dec in net dfr. tax asset (Inc)/Dec in minority interest (Inc)/Dec in oth. non-curr. ast. Cash flow from investing actv. Inc/(Dec) in debt Inc/(Dec) in equity/premium Others Dividends Cash flow from financing actv. Cash generated/(utilized) Cash at start of the year Cash at end of the year (3,628) 17,666 14,038 30,131 (27,085) (57,743) 4,614 (3,257) 328 (94) (83,237) 51,481 1,130 (635) 444 51,532 (1,575) 2,532 958 (1,337) 1,032 (305) 17,328 (15,719) (2,357) (1,191) (622) (87) (1,631) (21,606) 7,352 (1,970) 413 444 5,351 1,072 958 2,030 (851) 4,050 3,200 20,971 (16,846) (1,992) (4,932) (797) 1,319 (626) (23,874) 3,938 (2,135) 1,244 444 2,602 (300) 2,030 1,730 (4,563) 2,339 (2,225) 18,628 (9,448) (2,500) (1,000) (12,948) (1,050) 444 (1,494) 4,186 1,730 5,915 (3,762) 3,650 (112) 23,379 (8,553) (2,500) (1,000) (12,053) (7,300) 444 (7,744) 3,582 5,915 9,497 FY2011 7,536 10,206 17,742 129 17,872 (1,778) 16,093 FY2012 6,526 13,368 19,894 19,894 (2,260) 17,633 FY2013E 4,990 15,496 20,486 20,486 (2,715) 17,771 FY2014E 6,369 16,712 23,081 23,081 (2,229) 20,852 FY2015E 8,629 17,968 1 26,598 26,598 (3,106) 23,491
May 3, 2013
12
Key ratios
Y/E March Valuation ratio (x) P/E (on FDEPS) P/CEPS P/BVPS Dividend yield EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS Cash EPS Dividend Book value DuPont analysis Tax retention ratio (PAT/PBT) Cost of debt (PBT/EBIT) EBIT margin (EBIT/Sales) Asset turnover ratio (Sales/Assets) Leverage ratio (Assets/Equity) Operating ROE Return ratios (%) RoCE (pre-tax) Angel RoIC RoE Turnover ratios (x) Asset turnover (fixed assets) Receivables days Payable days 0.7 34 263 0.6 33 225 0.6 30 220 0.6 30 220 0.7 30 220 8.2 18.5 12.4 8.1 18.0 8.4 7.0 16.4 4.6 7.7 19.8 7.7 9.3 27.8 9.3 0.8 0.8 0.2 0.5 2.4 12.4 0.7 0.6 0.1 0.6 2.5 8.4 0.5 0.5 0.1 0.6 2.7 4.6 0.7 0.6 0.1 0.6 2.5 7.7 0.6 0.7 0.1 0.7 2.3 9.3 15.9 42.8 1.0 128.5 11.2 46.4 1.0 133.3 6.0 46.9 1.0 132.5 10.9 54.9 1.0 142.3 14.5 61.9 1.0 155.7 20.0 7.4 2.5 0.3 3.0 9.0 1.5 28.3 6.8 2.4 0.3 2.6 7.8 1.5 53.0 6.8 2.4 0.3 2.3 7.4 1.4 29.1 5.8 2.2 0.3 2.0 6.5 1.3 21.8 5.1 2.0 0.3 1.7 5.4 1.2 FY2011 FY2012E FY2013E FY2014E FY2015E
May 3, 2013
13
Research Team Tel: 022 - 3935 7800
E-mail: research@angelbroking.com
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Bharti Airtel No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%) Reduce (-5% to -15%)
Accumulate (5% to 15%) Sell (< -15%)
Neutral (-5 to 5%)
May 3, 2013
14

Bharti Airtel 4Q FY 2013

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Bharti Airtel 4Q FY 2013

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4QFY2013 Result Update | Telecom

Source: Company, Angel Research

Abs. (%) Sensex Bharti Airtel

1yr (1.0) (3.9)

3yr 12.6 7.0

Source: Company, Angel Research

Please refer to important disclosures at the end of this report