Result Update
January 25, 2016
Rating matrix
Rating
Target
Target Period
Potential Upside
:
:
:
:
Idea Cellular (IDECEL)
Buy
| 130
12 months
22%
Pricing vs. volumes - What will be the trend?
What’s changed?
Target
EPS FY16E
EPS FY17E
Rating
Changed from | 170 to | 130
Changed from | 9.8 to | 8.2
Changed from | 6 to | 5.3
Unchanged
Quarterly performance
Revenue
EBITDA
EBITDA (%)
PAT
Q3FY16
9,009.7
3,128.5
34.7
764.2
Q3FY15
8,017.5
2,752.6
34.3
767.1
YoY (%)
12.4
13.7
39 bps
(0.4)
Q2FY16 QoQ (%)
8,689.1
3.7
3,057.0
2.3
35.2 -46 bps
809.3
-5.6
Key financials
| Crore
Net Sales
EBITDA
PAT
EPS (in |)
FY14
26,519
8,334
1,968
5.9
FY15
31,571
10,812
3,193
8.9
FY16E
35,805
12,660
2,942
8.2
FY17E
39,687
14,016
1,907
5.3
FY15
12.0
14.7
5.9
1.7
13.9
11.3
FY16E
13.1
16.0
7.1
1.5
11.4
7.7
FY17E
20.2
24.6
6.7
1.4
6.9
6.8
Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)
FY14
18.0
22.0
7.1
2.1
11.9
9.6
Stock data
Particular
Market Capitalization (| Crore)
Total Debt (FY15) (| Crore)
Cash (FY15) (| Crore)
EV (| Crore)
52 week H/L
Equity capital
Face value
Amount
38,469.8
26,859.1
1,553.7
63,775.2
203 / 107
3,597.8
10.0
Price performance
Bharti Airtel
RCOM
Idea
1M
-7.5
-22.2
-23.4
3M
-19.5
-18.0
-29.5
| 106
6M
-32.0
-3.3
-40.3
12M
-19.2
-16.4
-35.5
Research Analysts
Bhupendra Tiwary
Bhupendra.tiwary@icicisecurities.com
Sneha Agarwal
sneha.agarwal@icicisecurities.com
ICICI Securities Ltd | Retail Equity Research
• Idea reported a 5.13% QoQ increase in total minutes on the network
to 199.1 billion minutes vs. expectations of 201.3 billion minutes,
owing to lower-than-expected subscriber growth and MoU increase.
Voice revenues came in at | 6310.4 crore, up 2.4% QoQ. Voice
revenues also remained lower-than-expected owing to the fall in the
voice tariff to 31.6 paisa vs. an expectation of 31.9 paisa. Data
revenues exhibited 7.0% QoQ growth to | 1792.8 crore, forming
20.2% of mobility revenues due to 12.4% QoQ increase in the data
consumption per subscriber to 684 MB in the quarter. Data ARMB
continued to decline, falling 4.8% QoQ to 21.1 paisa
• EBITDA came in at | 3128.5 crore, lower than our expectations of
| 3247.3 crore owing to the higher decline in the realisations. EBITDA
margins came in at 34.7%, down 46 bps QoQ
• PAT came in at | 764.2 crore vs. estimate of | 839.9 crore. The miss
was due to lower-than-expected margins and higher depreciation
Idea to focus on better voice realisations vs. volume growth
Voice volume growth for Idea has been robust at 5.13% QoQ growth in
Q3FY16. However, voice tariffs continued to decline 2.3% QoQ to 31.6
paisa. The decline can be easily attributed to higher price incentives,
which were offered to garner a larger subscriber market share, as evident
from 3.2% QoQ growth in subscriber addition with ~8.0% QoQ
subscriber growth in new circles. The company indicated increased focus
on reversing the trend in the voice tariff decline even if it comes at a cost
of lower subscriber market share to secure its cash flows ahead of
spectrum renewals. We have factored in voice volume growth of 11.5%
CAGR in FY15-17E to 849 billion minutes. We expect voice ARPM to
decline at 5.6% CAGR in FY15-17E to 31.7 paisa. Voice revenues are
expected to grow at 5.2% CAGR in FY15-17E to | 26981.7 crore.
Heightened competition in data space, RJio fears linger
There has been a continuous slide in data tariffs ((4.8% QoQ) in Q3FY16)
as supply of 3G/4G suppliers has increased. Such a decline is expected to
continue, more so with Reliance Jio launch. We expect data tariffs to
decline at 11.2% CAGR over FY15-17E hence leading to data revenue
growth of 42.5% to | 9251.6 crore despite 60.6% growth in data volumes
to 445 billion MB over the same period. However, the price distortion by
Reliance Jio could lead to some downside risks to our estimates.
Revises capex guidance upwards yet again to | 7500 crore…
Idea has revised its capex guidance to | 7500 crore from the earlier | 6500
crore in FY16 (| 5500 crore at the beginning of FY16) owing to the
accelerated network roll-out towards 4G and optic fibre expansion. It is
targeting a run rate of 40-45K BTS vs. the initial run rate of 15-20K BTS.
Such a revival though would upgrade its networks, would lead to further
postponement in its deleveraging plans.
Reduce target price to | 130 factoring in higher capex
We have revised our estimates for Idea factoring in higher depreciation
and interest emanating from the spectrum. Though the company guided
for a cautious approach on the upcoming auctions, any splurge could
dent profitability further. The stock has corrected ~23% in the last month
with fears of damage with RJio launch. There could be further downside
risks as and when Jio launches its services. We reduce the target price to
| 130, maintaining BUY at this levels.
Variance analysis
Q3FY16 Q3FY16E
9,009.7 9,140.3
Revenue
Other Income
Q3FY15
8,017.5
Q2FY16
8,689.1
YoY (%) QoQ (%)
12.4
3.7
30.8
15.0
132.6
33.7
-76.8
-8.5
Employee Expenses
Marketing Expenses
Network operating expenditure
411.4
912.0
2,095.4
446.5
884.5
2,044.1
379.0
737.7
1,798.0
427.8
824.1
1,998.1
8.5
23.6
16.5
-3.8
10.7
4.9
License and WPC Charges
Roaming & Access Charges
1,034.8
1,190.3
1,042.0
1,213.6
903.4
1,204.3
994.7
1,142.0
14.6
-1.2
4.0
4.2
EBITDA
3,128.5
3,247.3
2,752.6
3,057.0
13.7
2.3
EBITDA Margin (%)
Depreciation
34.7
1,623.1
35.5
1,590.4
34.3
1,482.6
35.2
1,538.1
39 bps
9.5
-46 bps
5.5
Interest
365.7
379.8
230.9
306.3
58.4
19.4
Total Tax
PAT
406.3
764.2
452.2
839.9
404.6
767.1
437.1
809.3
0.4
-0.4
-7.0
-5.6
Key Metrics
Subscribers (Million)
ARPU (Rs)
MoU (Rs)
ARPM (Rs)
171.9
176
393.0
44.8
172.7
179
395.6
44.9
150.5
179
388.0
46.3
166.6
175
386.0
45.3
14.2
-1.7
1.3
-3.2
3.2
0.6
1.8
-1.1
Comments
Revenues came in lower-than-expected owing to higher-than-expected
decline in both data and voice tariffs
There has been a ramp-up in network expansion as the company is instaltling
more 3G/4G BTS to remain competitive in the data space
Higher network expenses and lower profitability on the revenue front with
declining realisations impacted margins
The quarter has incremental amortisation charge of | 62.8 crore on account
of the newly acquired March spectrum put to use
The interest charge also had an additional | 89.2 crore impact from the
spectrum put to use in the quarter
Total PAT has been dented due to increased depreciation & interest charge
and also due to lower operating leverage in the quarter
Data tariffs continued to decline as there has been an increase in supply of
3G,4G data providers in the telecom space
Source: Company, ICICIdirect.com Research
Change in estimates
(| Crore)
Revenue
Old
36,178.8
FY16E
New % Change
35,805.0
-1.0
Old
40,053.2
FY17E
New % Change
39,687.1
-0.9
EBITDA
EBITDA Margin (%)
13,036.2
36.0
12,660.1
35.4
-2.9
-67 bps
14,799.8
37.0
14,015.9
35.3
-5.3
-163 bps
3,512.4
2,941.5
-16.3
2,143.7
1,907.4
-11.0
EPS (|)
9.8
8.2
Source: Company, ICICIdirect.com Research
-16.3
6.0
5.3
-11.0
PAT
Comments
The continued fall in realisation owing to heightened competition has made us further
tone down our tariff assumptions in data space
We have factored in higher network opex in line with the company's guidance of
increased focus towards network roll-out, hence, impacting overall margins
The incremental depreciation and interest charge with respect to spectrum would dent
overall PAT
Assumptions
Wireless Subscribers (Mn)
FY14
135.8
FY15
157.8
Current
FY16E
FY17E
176.8
186.3
Earlier
FY16E
FY17E
177.5
187.1
Blended ARPU
Total Minutes
168.4
587.8
176.5
683.4
177.1
789.9
181.1
849.9
179.2
792.9
182.7
853.4
MoU per subscriber
ARPM (Paisa)
380.9
44.4
388.4
45.6
394.1
44.6
390.1
46.0
394.5
44.8
390.1
46.2
Comments
We have slightly toned down our subscriber addition estimates as the company
guided for concentration on profitable minutes versus subscriber addition
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 2
Company Analysis
Robust subscriber additions…
Idea has exhibited higher than industry subscriber and revenue growth in
the past few years. Subscribers have grown at 30.9% CAGR (FY08-15)
while revenue has grown at 24.5% CAGR in the same period. Also, its
revenue market share has increased from 9.6% in FY08 to 17.5% in FY15.
The company has revised its subscriber reporting. Hence, the difference
between VLR subscribers and reported subscribers has widened in the
quarter. The company indicated it would be focusing on taking price hikes
in the coming quarters as opposed to being aggressive on subscriber
additions. We expect Idea to have a subscriber growth of 8.7% CAGR in
FY15-17E to 186.3 million subscribers with major growth coming in from
new circles.
Million
Exhibit 1: Subscriber details trends
200
180
160
140
120
100
80
60
40
20
0
121.6
135.8
157.8
176.8
186.3
FY13
FY14
FY15
FY16E
FY17E
Subscribers
Source: Company, ICICIdirect.com Research
Trend in voice tariffs remains to be seen; Idea guides reversal
Voice volume growth has been robust at 5.13% QoQ growth in the
quarter. However, voice tariffs continued to decline 2.3% QoQ to 31.6
paisa. The decline can be easily attributed to the higher price incentives,
which were offered to garner a larger subscriber market share, as evident
from 3.2% QoQ growth in subscriber addition with ~8.0% QoQ
subscriber growth in the new circles. The company indicated increased
focus on reversing the trend in the voice tariff decline even if it comes as
a cost of lower subscriber market share so as to secure its cash flows
ahead of the spectrum renewals. We have factored in voice volume
growth of 11.5% CAGR in FY15-17E to 849 billion minutes. We expect
voice ARPM to decline at 5.6% CAGR in FY15-17E to 31.7 paisa. Voice
revenues would grow at 5.2% CAGR in FY15-17E to | 26981.7 crore.
ICICI Securities Ltd | Retail Equity Research
Page 3
450
400
350
300
250
200
150
100
50
0
0.46
0.44
0.45
0.46
177
181
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.3
0.41
154
176
168
378
381
388
394
390
FY13
FY14
FY15
FY16E
FY17E
MoU
ARPU
|
| / Minutes
Exhibit 2: ARPM trends
ARPM
Source: Company, ICICIdirect.com Research
Data revenues to grow at 39.8% CAGR in FY15-17E
Data revenues have almost doubled in the past year to | 4553.0 crore in
FY15 from | 2325.2 crore in FY13. With the increased penetration of smart
phones, data subscribers for Idea rose from 2.6 crore in FY13 forming
21.6% of total subscribers to 3.3 crore in FY15. We expect it to rise to 5.0
crore subscribers, forming 27.1% of total subscribers. Data usage per
subscriber has also risen from 148 MB in FY13 to 514 MB in FY15, hence
reaching 172 billion MB data traffic by FY15. Idea, in the recently held
spectrum auctions invested about | 30307 crore to win back its expiring
spectrum and also to augment its spectrum portfolio. In addition, it has
also purchased spectrum from Videocon in two circles of Gujarat and
Uttar Pradesh (West) for an outlay of ~| 3310 crore in Q3FY16, extending
Idea’s 4G services to 12 service areas.
During Q3FY16, data growth remained robust at 80.9 billion MB (up
12.4% QoQ). Data ARMB declined 4.8% QoQ to 21.1 paisa. We believe
the data realisation per MB would continue the declining trend (more so
with Reliance Jio launch), and, consequently, expect ARMB to decline to
19.8 paisa by FY17. However, the data volume is expected to reach 444.8
billion MB by FY17 from 172.5 billion MB in FY15.
Exhibit 3: Data subscribers, total data traffic
50.5
43.3
60.0
50.0
40.0
33.4
30.0
307
445
25.3
FY14
FY15
Data Traffic (Bn MB)
20.0
10.0
173
79
500
450
400
350
300
250
200
150
100
50
0
FY16E
FY17E
Data Subscribers (Mn) - RHS
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 4
Margins to remain stagnant owing to higher network opex...
The continuous slide in realisations is already keeping operating margins
under check. In addition, as the company props up its network capex
there would be an elevated level of network costs. In the quarter, network
costs were up 4.9% QoQ and 16.5% YoY to | 2095.4 crore. We expect
costs to grow at 13.6% CAGR in FY15-17E to | 9282 crore, hence keeping
margins subdued at 35.3%.
Exhibit 4: Data subscribers, total data traffic
40.0
30.0
34.2
31.4
35.0
35.4
35.3
26.7
(%)
25.0
20.0
15.0
10.0
4.5
10.1
7.4
8.2
4.8
5.0
0.0
FY13
FY14
FY15
EBITDA Margin
FY16E
FY17E
PAT Margin
Source: Company, ICICIdirect.com Research
Other takeaways from conference call
• Idea's gross block, including CWIP, has increased from | 45300 crore
as of December 31, 2013 to | 96790 crore as on December 31, 2015.
Consequently, the net debt to annualised is EBITDA now at 3.3
• Idea revised its capex guidance to | 7500 crore for FY16E from the
initial | 6500 crore on account of accelerated 4G capex and
associated fibre roll-out. The capex for the quarter was | 2310 crore
• Idea reiterated upgrading its GSM network BTS equipment in metro
cities, large and midsized towns with latest version of Single RAN
equipment, to build capability to deploy two simultaneous
technologies, namely 3G on 900 MHz spectrum BTS or 4G on 89
MHz spectrum along with GSM technology
• The company replaced its old licenses in seven circles with the
spectrum it won in March 2015 consequent to which there was an
additional amortisation and interest charge of | 62.8 crore and | 89.2
crore, respectively, in the quarter. The incremental impact in the
coming quarter is expected at | 263 crore and | 372 crore for
amortisation and interest, respectively
• The company guided at changing its stance towards voice tariff
reversal even if it comes at a cost of slight losses in the subscriber
market share
• The management indicated having a cautious stance in the
upcoming auctions
• The spectrum deal with Videocon in two circles of Gujarat and UP
(West) is subject to approval from DoT, which is likely to get
completed in the first half of February
ICICI Securities Ltd | Retail Equity Research
Page 5
Valuation
We have revised our estimates for Idea factoring in higher depreciation
and interest emanating from the spectrum. Though the company guided
for a cautious approach on the upcoming auctions, any splurge could
dent profitability further. The stock has corrected ~23% in the last month
with fears of damage from the RJio launch. There could be further
downside risks as and when Jio launches its services. We reduce the
target price to | 130, maintaining BUY at this level.
Exhibit 5: DCF Assumptions
Particulars
WACC
Revenue CAGR over FY16E - FY22E
PV of Cash Flow Till Terminal Year
Terminal Growth
Present Value of terminal cash flow
PV of firm
Less: Net Debt
Total present value of the Equity (excluding current cash)
Number of Equity Shares outstanding
DCF - Target price (|)
Amount
10.9%
10.1%
8,124.8
4.0%
90,346.8
98,471.6
51,535.3
46,936.2
360.0
130
Source: Company, ICICIdirect.com Research
Exhibit 6: Valuations
FY14
FY15
FY16E
FY17E
Sales
(| cr)
26,518.9
31,570.9
35,805.0
39,687.1
Growth
(%)
18.1
19.1
13.4
10.8
EPS
(|)
5.9
8.9
8.2
5.3
Growth
(%)
94.3
49.7
(7.9)
-35.2
PE
(x)
18.0
12.0
13.1
20.2
EV/EBITDA
(x)
7.1
5.9
7.1
6.7
RoNW
(%)
11.9
13.9
11.4
6.9
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 6
RoCE
(%)
9.6
11.3
7.7
6.8
Company snapshot
250
200
150
Target Price | 130
100
50
Jan-17
Oct-16
Jul-16
Apr-16
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
0
Source: Bloomberg, Company, ICICIdirect.com Research
Key events
Feb-12
Supreme Court cancels licenses, which include Idea's licenses in seven circles. It gives way to lower competition in the industry
Nov-12
Spectrum auction post license cancellation takes place. These auctions reduce several players to regional operators. Idea acquires licenses in the cancelled circles
Jun-13
Pricing power returns to operators. ARPMs start showing upward momentum. Idea increases its ARPM from 41 paisa at the end of FY13 to 44.9 paisa by Q3FY14
Feb-14
Spectrum auctions held in the 900 and1800 MHz band while Idea purchases spectrum in 11 circles at an outlay of | 10716 crore
Jun-14
Idea Cellular succesfully completes its QIP of | 3000 crore and allots 223.9 million fresh equity shares at an issue price of | 134 per equity share, including | 124 as
a premium on per share
Idea raises | 750 crore by making preferential allotment to Axiata Group. Axiata was alloted 51.8 crore equity shares at | 144.68 per equity share
Jul-14
Mar-15
Dec-15
Jan-15
Spectrum auctions held in the 800, 900, 1800 and 2100 Mhz band. Idea participates in auctions and wins back all its expiring spectrum with a total of 79.4 MHz
won. The total payout for Idea is | 30307 crore and the immediate payout is | 7790 crore
Enters into agreement with Videocon to purchase its spectrum in the circles of UP(W) and Gujarat for an outlay of | 3310 crore
Launches its high-speed 4G LTE network across four South India telecom service areas of Andhra Pradesh, including Telangana, Karnataka, Kerala, and Tamil Nadu.
Further, Idea on 14 January, 2016 extends its 4G services to telecom circles of Madhya Pradesh and Chhattisgarh, Punjab and Haryana, and now cover 183 towns
across seven circles for high-speed LTE services
Source: Company, ICICIdirect.com Research
Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
Name
Aditya Birla Group
Axiata Group Bhd
Providence Equity Partners LLC
Schroder Investment Management Ltd. (SIM)
Capital World Investors
ICICI Prudential Life Insurance Company Ltd.
The Vanguard Group, Inc.
First State Investments (Singapore)
Stewart Investors
BNP Paribas Investment Partners Asia Ltd.
Shareholding Pattern
Latest Filing Date % O/S Position (m)n Change (m)
30-Sep-15 0.42
1,520.4
0.0
30-Sep-15 0.20
712.0
0.0
30-Sep-15 0.07
245.0
0.0
30-Nov-15 0.02
78.6
0.0
30-Sep-15 0.02
70.4
7.7
30-Sep-15 0.02
63.6
5.6
30-Sep-15 0.02
61.7
0.0
30-Nov-15 0.02
58.7
9.1
30-Sep-15 0.01
48.9
-49.7
30-Sep-15 0.01
42.4
4.4
(in %)
Promoter
FII
DII
Others
Sep-14 Dec-14 Mar-15
42.28
42.27
42.27
24.96
24.31
24.60
3.93
4.36
4.63
28.83
29.06
28.50
Jun-15
42.26
24.43
4.73
28.58
Sep-15
42.25
24.05
5.12
28.58
Source: Reuters, ICICIdirect.com Research
Recent Activity
Buys
Investor name
Capital Research Global Investors
First State Investments (Singapore)
Capital World Investors
ICICI Prudential Life Insurance Company Ltd.
BNP Paribas Investment Partners Asia Ltd.
Sells
Value
+59.50M
+19.33M
+17.59M
+12.69M
+10.05M
Shares
+26.07M
+9.09M
+7.71M
+5.56M
+4.40M
Investor name
Stewart Investors
Reliance Capital Asset Management Ltd.
Union Investment Privatfonds GmbH
L&T Investment Management Limited
HDFC Asset Management Co., Ltd.
Value
-113.37M
-6.59M
-6.66M
-4.98M
-3.92M
Shares
-49.68M
-3.10M
-2.92M
-2.34M
-1.84M
Source: Reuters, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 7
Financial summary
Profit and loss statement
(Year-end March)
Total operating Income
Growth (%)
Employee Expenses
Roaming & Access Charges
Network operating expenditure
License and WPC Charges
SG&A Expenses
Other Costs
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
Non Operating Expenses
PBT
MI/ Profit from associates
Total Tax
PAT
Growth (%)
EPS (|)
| Crore
FY14
26518.9
18.1
1,312.1
4,161.6
6,499.0
2,923.8
2,467.4
821.4
18185.2
8333.7
38.8
4519.4
770.0
0.0
0.0
3044.3
0.0
1076.4
1967.8
94.7
5.9
FY15
31570.9
19.1
1,529.9
4,731.3
7,195.7
3,535.2
2,878.3
888.9
20759.2
10811.7
29.7
5303.6
1045.2
469.7
0.0
4932.5
0.0
1739.6
3192.9
62.3
8.9
FY16E
35805.0
13.4
1,662.2
4,712.0
8,238.4
4,093.8
3,436.2
1,002.4
23144.9
12660.1
17.1
6540.6
1810.6
201.9
0.0
4510.7
0.0
1569.2
2941.5
-7.9
8.2
FY17E
39687.1
10.8
1,808.2
5,079.5
9,282.0
4,444.9
3,864.6
1,191.9
25671.1
14015.9
10.7
8135.8
3130.1
140.0
0.0
2890.0
0.0
982.6
1907.4
-35.2
5.3
Cash flow statement
| Crore
(Year-end March)
FY14
Profit after Tax
1,967.8
Add: Depreciation
4,519.4
Add: Interest paid
770.0
(Inc)/dec in Current Assets
178.4
Inc/(dec) in CL and Provisions
-1,237.5
Others
0.0
CF from operating activities
6,198.1
(Inc)/dec in Investments
812.5
(Inc)/dec in Fixed Assets
-15,499.7
Others
678.7
CF from investing activities
-14,008.4
Issue/(Buy back) of Equity
5.3
Inc/(dec) in loan funds
961.3
Dividend paid & dividend tax
-169.7
Interest Paid
-770.0
Others
7,807.2
CF from financing activities
7,834.1
Net Cash flow
23.8
Opening Cash
164.3
Closing Cash
188.1
Source: Company, ICICIdirect.com Research
FY15
3,192.9
5,303.6
1,045.2
(1,672.7)
1,054.3
0.0
8,923.4
-11,311.2
-4,962.5
227.6
-16,046.1
278.2
5,611.8
-383.8
-1,045.2
4,027.3
8,488.3
1,365.6
188.1
1,553.7
FY16E
2,941.5
6,540.6
1,810.6
(394.9)
2,610.1
0.0
13,508.0
-500.0
-37,507.0
0.0
-38,007.0
0.0
2,150.0
-168.5
-1,810.6
24,080.0
24,250.9
-248.1
1,553.7
1,305.6
FY17E
1,907.4
8,135.8
3,130.1
(1,112.6)
-2,550.6
0.0
9,510.2
-500.0
-10,000.0
0.0
-10,500.0
0.0
150.0
-168.5
-3,130.1
4,500.0
1,351.4
361.6
1,305.6
1,667.2
FY14
FY15
FY16E
FY17E
5.9
19.5
49.8
0.5
0.6
8.9
23.6
64.0
1.1
4.3
8.2
26.3
71.7
0.5
3.6
5.3
27.9
76.5
0.5
4.6
31.4
14.4
7.4
0.9
11.0
82.2
34.2
17.4
10.1
0.8
11.3
79.1
35.4
17.1
8.2
0.7
14.6
93.3
35.3
14.8
4.8
0.7
16.5
63.4
11.9
9.6
13.6
13.9
11.3
12.0
11.4
7.7
9.3
6.9
6.8
7.7
18.0
7.1
2.2
1.5
2.1
12.0
5.9
2.0
1.2
1.7
13.1
7.1
2.5
1.1
1.5
20.2
6.7
2.4
1.0
1.4
2.5
1.2
0.7
2.5
1.2
0.9
4.2
2.1
0.7
4.1
2.1
1.1
0.7
0.9
0.7
1.0
Source: Company, ICICIdirect.com Research
Balance sheet
| Crore
(Year-end March)
Liabilities
Equity Capital
Reserve and Surplus
Others
Total Shareholders funds
Total Debt
Deferred Tax Liability
Others
Total Liabilities
FY14
FY15
FY16E
FY17E
3,319.6
13,205.4
1.9
16,527.0
20,634.9
1,813.3
922.9
39,898.1
3,597.8
19,429.5
1.9
23,029.3
26,859.1
1,901.5
963.3
52,753.1
3,597.8
22,202.5
1.9
25,802.3
53,089.1
1,901.5
963.3
81,756.2
3,597.8
23,941.4
1.9
27,541.2
57,739.1
1,901.5
963.3
88,145.1
Assets
Gross Block
Less: Acc Depreciation
Net Block
Capital WIP
Total Fixed Assets
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Creditors
Provisions
Total Current Liabilities
Net Current Assets
51,219.6
21,623.8
29,595.9
11,419.4
41,015.3
221.7
68.3
800.6
4,115.2
3.5
188.1
5,175.7
5,973.1
686.3
6,659.4
-1,483.6
62,461.0
26,927.4
35,533.6
5,140.5
40,674.1
11,532.9
71.0
978.9
5,504.2
106.2
1,553.7
8,214.0
6,838.1
875.6
7,713.7
500.3
90,608.5
33,468.0
57,140.5
14,500.0
71,640.5
12,032.9
70.2
1,428.9
5,435.7
120.4
1,305.6
8,360.8
9,151.8
1,171.9
10,323.8
-1,963.0
105,108.5
41,603.9
63,504.7
10,000.0
73,504.7
12,532.9
79.6
1,791.4
6,163.3
133.5
1,667.2
9,835.0
6,890.8
882.4
7,773.2
2,061.7
Other Non Current Assets
Application of Funds
144.8
45.8
45.8
45.8
39,898.1
52,753.1
81,756.2
88,145.1
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Key ratios
(Year-end March)
Per share data (|)
EPS
Cash EPS
BV
DPS
Cash Per Share
Operating Ratios
EBITDA Margin (%)
EBIT Margin (%)
PAT Margin (%)
Inventory days
Debtor days
Creditor days
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt/EBITDA
Debt / Equity
Current Ratio
Quick Ratio
Source: Company, ICICIdirect.com Research
.
Page 8
ICICIdirect.com coverage universe (Telecom)
CMP
Sector / Company
(|)
TP(|) Rating
299 480 Buy
Bharti Airtel (BHATE)
362 530 Buy
Bharti Infratel (BHAINF)
107 130 Buy
Idea Cellular (IDECEL)
402 500 Buy
Tata Comm. (VIDSAN)
Source: Company, ICICIdirect.com Research
M Cap
(| Cr)
119,462
68,746
38,470
11,457
ICICI Securities Ltd | Retail Equity Research
EPS (|)
FY15 FY16E FY17E
13.0 14.6 17.0
10.5 12.1 14.7
8.9
8.2
5.3
0.0
2.0 16.4
P/E (x)
EV/EBITDA (x)
FY15 FY16E FY17E FY15 FY16E FY17E
23.0 20.5 17.6 5.7
6.0
4.9
34.5 30.0 24.7 13.3 12.4 10.9
12.0 13.1 20.2 5.9
7.1
6.7
NA 199.3 24.5 8.5
7.8
6.6
RoCE (%)
RoE (%)
FY15 FY16E FY17E FY15 FY16E FY17E
11.1 10.0 11.5 9.9
5.8
9.8
15.8 18.5 22.2 11.7 14.1 17.4
11.3
7.7
6.8 13.9 11.4
6.9
6.9
7.0
9.8 0.7 74.4 136.3
Page 9
RATING RATIONALE
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ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey
Head – Research
pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com
ICICI Securities Ltd | Retail Equity Research
Page 10
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Page 11