Bharti Infratel likely to post strong Q4 profit driven by healthy operating income

Telecom tower infrastructure services provider Bharti Infratel is expected to report strong earnings growth in January-March quarter driven by healthy operating income in rental as well as energy segments.

The company will announce its quarterly earnings on April 24.

Kotak Institutional Equities, which expects rental/tenant surge to continue and robust net tenancy additions, said profit growth in Q4 could be 23.1 percent QoQ as EBITDA (earnings before interest, tax, depreciation and amortisation) may grow 11.7 percent QoQ and margin expansion could be 146.6 basis points.

Its 11.7 percent sequential EBITDA growth assumption breaks down into a 7 percent QoQ growth in core service EBITDA (excluding exit penalty) and a sharp 60 percent QoQ jump in energy EBITDA.

“Q4 is a seasonally strong quarter for energy EBITDA.”

From an operational standpoint, the brokerage baked in (a) net sequential tenancy additions of 6,009, and (b) 2.7 percent QoQ jump in rental/tenant to Rs 40,034 per month.

According to Motilal Oswal, consolidated bottomline is likely to grow 9 percent and EBITDA 3 percent sequentially with margin expansion of 10 bps.

The brokerage expects consolidated revenue to grow 3 percent quarter-on-quarter led by healthy rental and energy revenue growth.
“We expect 2 percent QoQ growth in tenancies to 1,77,709. This coupled with 1 percent QoQ uptick in rental/tenant should drive 2 percent QoQ rental

revenue growth. Further, 4 percent QoQ uptick in energy and other reimbursement revenue should drive overall revenue,” it explained.

According to Kotak, revenue growth could be 4.3 percent QoQ. “Our revenue and EBITDA expectations do not include the expected Rs 90 crore exit penalties which it treats as an extraordinary.”
Key issues to watch out for would be consolidated revenue sharing per operator.

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