Bharti Infratel’s (BHIN’s) 3QFY16 consolidated EBITDA grew 5.5% y-o-y to Rs 13.43 billion (est: Rs 14.33 billion). Consolidated revenue grew 4.9% y-o-y to Rs 30.93 billion (est: Rs 31.85 billion), impacted by margin miss in energy as well as core business. Lower energy EBITDA contributed Rs 460 million of the Rs 900 million EBITDA miss. PAT grew 12% y-o-y to R5.65 billion (our estimate: R6.64 billion) led by EBITDA shortfall as well as lower other income.
Rollout intensity declined q-o-q on a reported basis to 3,285 net site additions in 3QFY16 vs 3,421 in 2QFY16.
However, after adjusting for one-off exits during the quarter due to certain operators not able to renew their spectrum in few circles, net site additions would have grown to 3,895.
We are cutting our EBITDA/PAT estimates by 3/6% largely led by lower energy and core margins. We expect 13%/17%/24% CAGR in revenue/EBITDA/EPS (FY16-18), led by 3%/11% CAGR in towers/co-locations. The stock trades at 24.4x/19.2x FY17/FY18 EPS and 10.1x/8.3x FY17/FY18 EV/EBITDA. Maintain ‘buy’ with a revised SOTP/DCF target of R485 (R520 earlier).