Bharti Airtel, 1Q FY 2014

7/27/2019 Bharti Airtel, 1Q FY 2014

1/14

Please refer to important disclosures at the end of this report 1

(` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)Net sales 20,300 20,460 (0.8) 19,362 4.8EBITDA 6,545 6,487 0.9 5,849 11.9

EBITDA margin (%) 32.2 31.7 54bp 30.2 203bp

PAT 689 509 35.5 791 (12.9)Source: Company, Angel Research

For 1QFY2014, Bharti Airtel (Bharti)s adjusted revenues as well as EBITDA came

better than expectations while the bottom-line was below our expectations due to

higher taxes. The company is now hopeful with regards its domestic operations as

mobile operators have increased tariffs and cut freebies after a bruising three-year

price war. The companys Africa operations are expected to continue to weighupon its overall performance. We maintain our Neutral rating on the stock.Result highlights: For 1QFY2014, Bhartis consolidated revenue stood at`20,300cr, down 0.8% qoq. Reported numbers were impacted by change in

accounting for JV (Indus Towers) from proportionate basis to equity accounting

leading to lower reported EBITDA as well as net debt. On an adjusted basis,

revenues grew by 3.5% qoq, led by strong performance in mobile - India business.

The Indian mobility business reported healthy KPIs with 4.0% qoq growth in voice

as well as overall average revenue per minute (ARPM) growth of 4.0% qoq to

`0.36/min and `0.44/min respectively. The consolidated EBITDA margin of the

company grew by 54bp qoq to 32.2%, led by expansion in margins in its domestic

business segments. Adjusting for Indus Towers, the EBITDA margin actually grew

by 131bp qoq. PAT came in at `689cr, up 35.5% qoq. Profitability was hit due tohigher tax expense with tax rate coming in at ~55%.

Outlook and valuation: The company cited that pricing power is returning to theoperators as competitive intensity is reducing. Incumbents control 69% of revenue

market share, which we believe will continue to improve as challenges would

continue to rationalize operations. Domestic wireless revenue is expected to be

driven by tariff improvement along with continued voice traffic and data growth.

Competitive intensity in Africa would keep pricing under pressure. We expect Bharti

to post a revenue CAGR of 7.1% over FY2013-15E. We have raised our operating

margin estimates on the back of improvement in ARPM in India business, cost

rationalization as a result of curtailed SG&A expenses and better efficiency in

Africa. Emerging regulatory clarity in the sector would be a positive for the sector inthe medium to long term. Bharti being the leader in the industry would be the keybeneficiary of the same. We maintain our Neutral rating on the stock. The SOTPbased valuation method prices the stock at `350.Key financials (Consolidated, IFRS)Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E FY2015ENet sales 59,467 71,475 80,359 83,535 92,173% chg 42.1 20.2 12.4 4.0 10.3

Net profit 6,035 4,261 2,297 3,640 5,168% chg (33.7) (29.4) (46.1) 58.5 42.0

EBITDA margin (%) 33.7 33.2 30.9 32.0 33.1

EPS (`) 15.9 11.2 6.0 9.2 12.9P/E (x) 21.7 30.7 57.5 37.6 26.7

P/BV (x) 2.7 2.6 2.6 2.4 2.2RoE (%) 12.4 8.4 4.6 6.8 8.9

RoCE (%) 8.2 8.1 7.0 8.1 9.7

EV/Sales (x) 3.2 2.7 2.4 2.3 2.0

EV/EBITDA (x) 9.5 8.3 7.9 7.1 5.9

Source: Company, Angel Research; Note: CMP as of August 2, 2013

NEUTRALCMP `345

Target Price -

Investment Period -

Stock Info

Sector

Net debt (`cr) 59,270

Bloomberg Code

Shareholding Pattern (%)

Promoters 65.2

MF / Banks / Indian Fls 8.2

FII / NRIs / OCBs 16.2Indian Public / Others 10.4

Abs. (%) 3m 1yr 3yr

Sensex (1.7) (2.9) 6.0

Bharti Airtel 8.1 8.8 8.4

Face Value (`)

BSE Sensex

Nifty

Reuters Code

130,903

1.0

370/238

483,761

Telecom

Avg. Daily Volume

Market Cap (`cr)

Beta

52 Week High / Low

5

19,164

5,944

BRTI.BO

BHARTI.IN

Ankita Somani022-39357800 Ext: 6819

[email protected]

Bharti AirtelPerformance highlights

1QFY2014 Result Update | Telecom

August 5, 2013


2/14

Bharti Airtel |1QFY2014 Result Update

August 5, 2013 2

Exhibit 1:1QFY2014 Financial performance (Standalone, Indian GAAP)

(` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg (yoy)Net sales 12,224 11,548 5.9 10,981 11.3 45,351 41,604 9.0Access charges 1,903 1,832 3.8 1,650 15.3 7,421 5,809 27.8License fees and spectrum charges 1,321 1,235 7.0 1,222 8.1 4,882 4,694 4.0

Employee costs 429 405 6.0 364 18.0 1,511 1,392 8.6

Other expenses 4,979 4,587 8.5 4,523 10.1 18,066 16,066 12.5

Total operating expenses 8,632 8,060 7.1 7,759 11.2 31,880 27,960 14.0

as % to sales 70.6 69.8 70.7 70.3 67.2

EBITDA 3,592 3,489 3.0 3,221 11.5 13,471 13,644 (1.3)Depreciation and amortization 1,815 1,757 3.3 1,652 9.9 6,827 5,916 15.4

EBIT 1,778 1,732 2.6 1,569 13.3 6,644 7,728 (14.0)

Interest cost 460 281 63.7 546 (15.8) 1,652 1,396 18.3

Other income 83 92 642 1,463 625

Exceptional item 230 - - 6,455 6,956 (7.2)

PBT 1,171 1,543 (24.1) 1,666 (29.7) 6,644 7,728 (14.0)

Tax 212 459 (53.7) 196 8.4 1,359 1,226 10.8

PAT 959 1,084 (11.6) 1,470 (34.8) 5,286 6,502 (18.7)EBITDA margin 29.4 30.2 (82)bp 29.3 5bp 29.7 32.8 (309)bp

EBIT margin 14.5 15.0 (46)bp 14.3 (25)bp 14.7 18.6 (392)bp

PAT margin 7.8 9.4 (155)bp 13.4 (554)bp 11.7 15.6 (254)bp

Source: Company, Angel Research

Strong domestic business performance

For 1QFY2014, Bharti reported ~1% sequential decline in revenues to `20,300cr.Reported numbers were impacted by change in accounting for JV (Indus Tower)

from proportionate basis to equity accounting leading to lower reported EBITDA as

well as net debt. On an adjusted basis, revenues grew by 3.5% qoq, led by strong

performance in mobile - India business.

Mobile business India: The revenue of the mobile business in India grew by 5.3%qoq to `11,601cr. The Indian mobility business reported healthy KPIs with 4.0%

qoq growth in voice as well as overall average revenue per minute (ARPM) growth

by 4.0% qoq to `0.36/min and `0.44/min respectively. The overall subscriber

base grew by 1.4% qoq with end of period (EoP) subscriber base standing at

191mn while minutes of usage (MOU) remained almost flat qoq at 455min.Mobile traffic grew by 2.1% qoq to 258bn min. Consequently, the overall as well

as voice ARPU grew by 3.8% and 3.9% qoq to `200/month and `166/month

respectively. The churn level remained healthy and stood flat qoq at 3.2%. VAS as

a percentage of mobility revenue marginally declined to 17.3% from 17.4% in

4QFY2013. VAS share has remained stable due to the decline in SMS revenue.

Implementation of TRAI guidelines for double confirmation on VAS services would

have a negative impact in the near future. The growth in non-voice revenues was

led by growth in data revenue, which grew from 6.5% to 7.4% of total mobile

revenues. Data ARPU increased to `63 from `55 in 4QFY2013. The data customer

base of the company increased by 7.1% qoq to 46.6mn. Data usage per

subscriber increased to 203MB from 187MB in 4QFY2013. Consolidated mobile -

India & South Asia revenue grew 6% qoq to `11,992cr.


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August 5, 2013 3

Exhibit 2:Trend in MOU (qoq)


Exhibit 3:Trend in VAS share (qoq)


Exhibit 4:Trend in ARPM (qoq)


Exhibit 5:Trend in ARPU (qoq)


Telemedia services: The revenue of the telemedia business declined by 0.4% qoqto `948cr. On an adjusted basis, revenues of telemedia actually grew by 7% qoq,

led by an improvement in APRU to `924/month from `906/month in 4QFY2013.

Bhartis subscriber base in this business reported a net addition of 1,406

subscribers to 3.3mn. The EBITDA margin of this business declined by 170bp qoq

to 39.7%.

419

431

433

417

435

455

455

(1.0)

2.8

0.4

(3.8)

4.4 4.8

(0.1)

(6)

(4)

(2)

0

2

4

6

390

400

410

420

430

440

450

460

3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

(%)

(min)

MoU qoq growth

15.8

16.216.3

16.8

17.3 17.4 17.3

15

16

17

18


(%)

VAS share

0.4

5

0.4

4

0.4

3

0.4

3

0.4

3

0.4

2

0.4

4

3.2

(1.7)

(2.6)

(0.2) (0.1)

(0.5)

4.0

(3)

(2)

(1)

0

1

2

3

4

5

0.30

0.35

0.40

0.45

0.50


(%)

(`/m

in)

ARPM qoq growth

187

189

185

177

185

193

200

2.2

1.1

(2.2)

(3.9)

4.3

4.3

3.8

(8)

(4)

0

4

8

150

160

170

180

190

200

210


(%)

(`/mon

th)

ARPU qoq growth


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August 5, 2013 4

Exhibit 6:Telemedia Subscriber base and ARPU trend


Passive infrastructure services: Revenues from passive infrastructure servicesdeclined by 2% qoq to `1,283cr (adjusted basis). The EBITDA declined by 7% qoq

to `574cr, with EBITDA margin contraction of 200bp qoq to 44.8%. The total

towers for Bharti Infratel and Indus Towers stood at 82,321 and 1,11,983,

respectively. Tenancy during the quarter remained flat on a sequential basis at

1.91x and 1.99x for Bharti Infratel and Indus Towers, respectively. The company

has changed accounting of Joint Ventures from proportionate consolidation (line

by line consolidation) to equity accounting; there has been no impact on

consolidated profitability on account of the same. The tower infrastructure segment

does not include Indus Towers financials.

Exhibit 7:Trend in Passive Infrastructure Business (qoq)


India capex during the quarter declined to `1,280cr vs `1,880cr in 4QFY2013

and `2,526cr in 1QFY2013. The company rolled out only 1,031 3G sites during

the quarter vis--vis 2,058 in the last quarter.

3,3

17

3,2

70

3,2

72

3,2

75

3,2

78

3,2

83

3,2

89

916 933

906910

909 906

924

800

850

900

950

2,500

2,700

2,900

3,100

3,300

3,500


(`)

(in

000's)

Telemedia subscribers (in 000's) ARPU

1.81 1.82 1.82 1.81 1.82 1.81 1.82

1.91 1.941.96 1.98 1.99 1.99 1.99

1.0

1.2

1.4

1.6

1.8

2.0

2.2

0

300

600

900

1,200


Tenancy

(x)

No.

oftowers

(in

00's)

Bharti Infratel (BTIL) Indus BTIL tenancy Indus tenancy


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August 5, 2013 5

Exhibit 8:1QFY2014 Financial performance (Consolidated, IFRS)

(` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg (yoy)Net revenue 20,300 20,460 (0.8) 19,362 4.8 80,359 71,475 12.4Operating expenditure 13,755 13,973 (1.6) 13,513 1.8 55,489 47,762 16.2EBITDA 6,545 6,487 0.9 5,849 11.9 24,870 23,712 4.9Depreciation & amortization 3,847 3,983 (3.4) 3,757 2.4 15,496 13,368 15.9

EBIT 2,698 2,504 7.7 2,092 29.0 9,374 10,344 (9.4)

Interest charges 1,168 1,210 (3.5) 821 42.2 4,384 3,819 14.8

Non operating expenditure (225) - - - - - - -

Other income - - - - -

PBT 1,756 1,295 35.6 1,270 38.2 4,990 6,526 (23.5)

Income tax 968 788 22.8 488 98.5 2,715 2,260 20.1

PAT 787 507 55.4 783 0.6 2,275 4,265 (46.7)

Share in earnings of associate 82 - 8 - (6)

Minority Interest 180 (2) (1) (23) (1)

Adj. PAT 689 509 35.5 791 (12.9) 2,297 4,261 (46.1)EPS (`) 1.8 1.3 35.4 2.0 (9.7) 6.0 11.2 (46.5)

EBITDA margin (%) 32.2 31.7 54bp 30.2 203bp 30.9 33.2 (223)bp

EBIT margin (%) 13.3 12.2 105bp 10.8 249bp 11.7 14.5 (281)bp

PAT margin (%) 3.4 2.5 91bp 4.1 (69)bp 2.9 6.0 (310)bp


Mobile Africa business: For 1QFY2014, Zain Africas revenue declined by 5.2%qoq to US$1,062mn as a result of political unrest in North Africa (Nigeria - which

contributes around 39% to the companys total African revenues). KPIs of the Africabusiness remained under pressure. Subscriber growth moderated to 0.48mn vs a

quarterly run-rate of 2mn. Subscriber growth in Africa has been impacted due to:

1) political unrest and 2) stricter KYC norms in various countries. A reduction in

tariff in the last one year has led to lower multi-SIM as cost on off-net calls has

seen a drastic cut in the recent past. MOU grew by 8.5% qoq to 134min, leading

to traffic on network growth of 11.2% qoq. Consequently, the ARPM declined by

14.7% qoq. ARPU declined 7.5% qoq to US$5.5. The EBITDA during the quarter

declined marginally by 0.6% qoq to US$885mn, primarily due to a 16% qoq

decline in access charges (due to reduction in interconnect charges). The EBITDA

margin stood at 26.7%, expanding by140bp qoq. The net loss during the quarter

increased to US$106mn vs US$90mn in 4QFY2013. Full year FY2013 capex for

the Africa business stood at `3,940cr vs `7,166cr in FY2012.

Exhibit 9:Operating metrics for Zain Africa

1QFY14 4QFY13 % chg qoq 1QFY13 % chg yoyARPM (US/min) 4.1 4.8 (14.7) 5.4 (24.6)

MOU (min) 134 123 8.5 120 11.2

ARPU (US$/month) 5.5 5.9 (7.5) 6.5 (16.2)

Subscriber base (mn) 64.2 63.7 0.8 55.9 14.9



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August 5, 2013 6

Consolidated margins improve

During the quarter, Bhartis consolidated EBITDA margin increased by 54bp qoq to

32.2%. Adjusting for Indus Towers, the EBITDA margin actually grew by 131bp

qoq. This was on the back of a healthy performance in the domestic businesses.

Segment-wise, the EBITDA was at `4,932cr (+9% qoq), with the EBITDA margin at

34.9% expanding by 100bp qoq. India PAT came in at `1,479cr, growing 36%

qoq, driven largely by a healthy operating performance. The EBITDA of the tower

infrastructure business declined by 7% qoq to `574cr, with EBITDA margin

contraction of 200bp qoq to 44.8%.

Exhibit 10:Opex break-up (qoq)


Outlook and valuation

The company cited that pricing power is returning to the operators as competitive

intensity is reducing. Incumbents control 69% of revenue market share, which we

believe will continue to improve as challenges would continue to rationalize

operations. The Management sounded confident of holding RPM in 2QFY2014

with further room to increase RPM seen in medium to long term. However, the

Management indicated that the company needs to navigate more cautiously in the

short-term, given weak seasonality in 2Q and high inflation impacting consumer

sentiments. There is still headroom for a further reduction in discounted minutesfrom the system. However, the Management indicated that the increase in tariff

would be gradual due to: 1) high consumer inflation and 2) consumer behavior

towards usage. 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 ~13% 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.

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.

13.9 14.3 15.1 15.0 13.9 13.7

22.6 24.0 23.3 24.9 25.3 23.2

8.6 8.4 8.18.2 8.2 8.8

4.7 4.8 4.95.0 5.3 5.4

16.9 18.3 17.316.2 15.5 16.7

33.3 30.2 31.3 30.5 31.7 32.2

0

20

40

60

80

100

4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

(%)

Access charges Network costs License fee Employee cost S,G&A cost EBITDA margin


7/14


August 5, 2013 7

Investments in Africa would continue with allocation towards: 1) brand expansion,

2) network enhancement, and 3) 3G expansion would also demand investments.

However, the Management has indicated that peak investment is now behind.

Investment in solar energy is high, as the Management believes it is for long term.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. 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 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.

The domestic wireless revenue is expected to be driven by tariff improvement along

with continued voice traffic and data growth. Competitive intensity in Africa wouldkeep pricing under pressure. We expect Bharti to post a revenue CAGR of 7.1%

over FY2013-15E. We have raised our operating margin estimates driven by

improvement in ARPM in India business, cost rationalization as a result of curtailed

SG&A expenses and better efficiency in Africa. While operationally theperformance in 1QFY2014 was better than our expectations, regulatory issues still

persist. Apart from this, higher debt, interest costs and forex risks pose a risk to

earnings. 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 inthe 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 5.9x FY2015E EV/EBITDA

and 26.7x FY2015E EPS. We maintain our Neutral rating on the stock. The SOTPbased valuation method prices the stock at `350.Exhibit 11:SOTP valuation

Particulars Parameter (FY2015E) Value/Share (`)Domestic business (excl. Tower) 15x P/E 283

Zain - Africa operations 7x EV/EBITDA 16

Bharti Infratel - Tower business 15% discount to CMP 50

Target price (`) 350Source: Company, Angel Research


8/14


August 5, 2013 8

Exhibit 12:One-year forward EV/EBITDA (x)


Exhibit 13:Recommendation summary

Company Reco. CMP Tgt. price Upside FY2015E FY2015E FY2012-15E FY2015E FY2015E(`) (`) (%) P/BV (x) P/E (x) EPS CAGR (%) RoCE (%) RoE (%)

Bharti Airtel Neutral 345 - - 2.0 26.7 4.8 9.7 8.9Idea Cellular Neutral 159 159 - 2.1 32.1 31.2 10.7 9.4

RCom Neutral 124 124 - 2.4 23.5 9.8 4.9 3.1

Source: Company, Angel Research; Note: CMP as on August 2, 2013

0

50,000

100,000

150,000

200,000

250,000300,000

350,000

400,000

Apr-

07

Jul-07

Oc

t-07

Jan-0

8

Apr-

08

Jul-08

Oc

t-08

Jan-0

9

Apr-

09

Jul-09

Oc

t-09

Jan-1

0

Apr-

10

Jul-10

Oc

t-10

Jan-1

1

Apr-

11

Jul-11

Oc

t-11

Jan-1

2

Apr-

12

Jul-12

Oc

t-12

Jan-1

3

Apr-

13

Jul-13

EV(`cr)

EV 12x 10x 8x 6x 4x


9/14


August 5, 2013 9

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 190mn.

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.


10/14


August 5, 2013 10

Profit and Loss account (Consolidated, IFRS)

Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E FY2015ENet sales 59,467 71,475 80,359 83,535 92,173Roaming and access charges 7,499 9,869 11,733 11,936 13,354

% of net sales 12.6 13.8 14.6 14.3 14.5

Network operating exp. 12,993 16,180 19,588 19,362 20,448

% of net sales 21.8 22.6 24.4 23.2 22.2

License fee 5,166 6,112 6,619 7,499 8,387

% of net sales 8.7 8.6 8.2 9.0 9.1

Other expenses 13,774 15,602 17,550 18,001 19,497

Total expenditure 39,432 47,762 55,489 56,798 61,685

% of net sales 66.3 66.8 69.1 68.0 66.9

EBITDA 20,035 23,712 24,870 26,737 30,488% of net sales 33.7 33.2 30.9 32.0 33.1

Dep. and amortization 10,206 13,368 15,496 15,862 17,276

Non operating expenses 111 - - (225) -

EBIT 9,719 10,344 9,374 11,101 13,212Interest charges 2,182 3,819 4,384 4,205 3,671

Other income, net 129 - - - -

Profit before tax 7,666 6,526 4,990 6,895 9,541

Provision for tax 1,778 2,260 2,715 3,127 4,294

% of PBT 23.2 34.6 54.4 45.4 45.0

PAT 5,887 4,265 2,275 3,768 5,248Share in earnings of associate - (6) - 82 -

Minority interest (148) (1) (23) 210 80Adj. PAT 6,035 4,261 2,297 3,640 5,168EPS (`) 15.9 11.2 6.0 9.2 12.9


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August 5, 2013 11

Balance sheet (Consolidated, IFRS)

Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E FY2015ELiabilitiesShare capital 1,899 1,899 1,899 1,899 1,899

Reserves and surplus 46,868 48,713 48,423 51,619 56,342

Tot. shareholders funds 48,767 50,611 50,322 53,517 58,241Minority interest 2,856 2,770 4,089 4,089 4,089

Secured loans 53,234 49,715 61,548 59,441 56,981

Unsecured loans 8,437 19,308 11,412 13,860 14,000

Total debt 61,671 69,023 72,961 73,301 70,981Other liabilities 4,665 5,078 6,322 6,322 3,000

Total liabilities 117,959 127,482 133,693 137,229 136,310AssetsGross block 96,810 112,529 117,636 126,636 135,636

Acc. depreciation 31,668 45,036 48,793 64,655 81,931

Net block 65,142 67,493 68,843 62,429 53,705

Goodwill 63,732 66,089 68,081 68,081 68,081

Oth. non-current assets 1,918 3,543 4,185 4,789 7,290

Investments 622 1,813 6,745 9,245 11,745Inventories 214 131 111 200 200

Sundry debtors 5,493 6,374 6,643 7,866 8,576

Cash and equivalents 958 2,030 1,730 5,917 8,766

Other current asst 3,921 4,461 5,062 7,197 9,386

Total current assets 10,585 12,995 13,545 21,179 26,929Less: - current liab. 28,430 29,450 33,446 34,234 37,180

Less:- provisions 118 129 184 184 184

Net current assets (17,962) (16,584) (20,085) (13,238) (10,435)Net deferred tax 4,506 5,128 5,925 5,925 5,925

Miscellaneous exp. - - - - -

Total assets 117,959 127,482 133,693 137,229 136,310


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August 5, 2013 12

Cash flow statement (Consolidated, IFRS)

Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E FY2015EPretax profit from operations 7,536 6,526 4,990 6,895 9,541

Depreciation 10,206 13,368 15,496 15,862 17,276

Expenses (deferred)/written off - - - - 1

Pre tax cash from operations 17,742 19,894 20,486 22,757 26,818

Other income/prior period ad 129 - - - -

Net cash from operations 17,872 19,894 20,486 22,757 26,818

Tax (1,778) (2,260) (2,715) (3,127) (4,294)

Cash profits 16,093 17,633 17,771 19,630 22,525(Inc)/Dec in

Current assets (3,628) (1,337) (851) (3,447) (2,899)

Current liabilities 17,666 1,032 4,050 788 2,946

Net trade working capital 14,038 (305) 3,200 (2,659) 46

Cash flow from oper. actv. 30,131 17,328 20,971 16,971 22,571(Inc)/Dec in fixed assets (27,085) (15,719) (16,846) (9,448) (8,553)

(Inc)/Dec in intangibles (57,743) (2,357) (1,992) - -

(Inc)/Dec in investments 4,614 (1,191) (4,932) (2,500) (2,500)

(Inc)/Dec in net dfr. tax asset (3,257) (622) (797) - -

(Inc)/Dec in minority interest 328 (87) 1,319 - -

(Inc)/Dec in oth. non-curr. ast. (94) (1,631) (626) (732) (2,582)

Cash flow from investing actv. (83,237) (21,606) (23,874) (12,680) (13,635)Inc/(Dec) in debt 51,481 7,352 3,938 340 (2,320)

Inc/(Dec) in equity/premium 1,130 (1,970) (2,135) - -

Others (635) 413 1,244 - (3,322)Dividends 444 444 444 444 444

Cash flow from financing actv. 51,532 5,351 2,602 (104) (6,087)Cash generated/(utilized) (1,575) 1,072 (300) 4,187 2,850

Cash at start of the year 2,532 958 2,030 1,730 5,917

Cash at end of the year 958 2,030 1,730 5,917 8,766


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August 5, 2013 13

Key ratios

Y/E March FY2011 FY2012 FY2013E FY2014E FY2015EValuation ratio (x)P/E (on FDEPS) 21.7 30.7 57.5 37.6 26.7

P/CEPS 8.1 7.4 7.4 6.7 5.8

P/BVPS 2.7 2.6 2.6 2.4 2.2

Dividend yield 0.3 0.3 0.3 0.3 0.3

EV/Sales 3.2 2.7 2.4 2.3 2.0

EV/EBITDA 9.5 8.3 7.9 7.1 5.9

EV/Total assets 1.6 1.5 1.5 1.4 1.3

Per share data (`)EPS 15.9 11.2 6.0 9.2 12.9

Cash EPS 42.8 46.4 46.9 51.4 59.1

Dividend 1.0 1.0 1.0 1.0 1.0

Book value 128.5 133.3 132.5 141.0 153.4

DuPont analysisTax retention ratio (PAT/PBT) 0.8 0.7 0.5 0.5 0.5

Cost of debt (PBT/EBIT) 0.8 0.6 0.5 0.6 0.7

EBIT margin (EBIT/Sales) 0.2 0.1 0.1 0.1 0.1

Asset turnover ratio (Sales/Assets) 0.5 0.6 0.6 0.6 0.7

Leverage ratio (Assets/Equity) 2.4 2.5 2.7 2.6 2.3

Operating ROE 12.4 8.4 4.6 6.8 8.9

Return ratios (%)RoCE (pre-tax) 8.2 8.1 7.0 8.1 9.7

Angel RoIC 18.5 18.0 16.4 20.6 27.7RoE 12.4 8.4 4.6 6.8 8.9

Turnover ratios (x)Asset turnover (fixed assets) 0.7 0.6 0.6 0.6 0.7

Receivables days 34 33 30 30 30

Payable days 263 225 220 220 220


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Disclosure of Interest Statement Bharti Airtel

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

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Bharti Airtel, 1Q FY 2014

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