Result Update

July 30, 2018

Rating matrix
Rating : Buy Bharti Airtel (BHATE) | 365
Target : | 425
Target Period : 12 months
Potential Upside : 17% Near term pain; remains consolidation beneficiary
What’s changed?  Revenues were at | 20080 crore, up 2.3% QoQ, aided by higher India
Target Changed from | 480 to | 425 wireless & Africa business revenues during the quarter. Indian
EPS FY19E Changed from | 3.4 to | 1.4 mobility business revenues were slightly ahead at | 10480 crore (up
EPS FY20E Changed from | 8.5 to | 4.8 1.2% QoQ) due to better-than-expected net additions for the quarter
Rating Unchanged (net additions of 40.3 mn during the quarter, out of which 28 mn were
added on account of Telenor merger). ARPU came in at | 105 (down
[

Quarterly performance 8.8% QoQ) vs. our estimate of | 106 (8% decline QoQ), with decline
Q1FY19 Q1FY18 YoY (%) Q4FY18 QoQ (%) largely contributed by price competition as well as lower ARPU
Revenue 20,080.0 21,958.1 -8.6 19,634.3 2.3 Telenor subscribers. Adjusting for integration of Telenor base, ARPU
EBITDA 6,721.8 7,794.1 (13.8) 6,911.1 (2.7) was at | 109. India wireless EBITDA came in | 2760.3 crore with
EBITDA (%) 33.5 35.5 -202 bps 35.2 -172 bps margin of 26.3% (down 210 bps QoQ). Data subscriber grew 10.1%
PAT 97.3 367.3 (73.5) 82.9 17.3 QoQ to 94.7 million subscribers
 Absolute EBITDA came in at | 6721.8 crore, down 2.7% QoQ while
Key financials margins came in at 33.5%, 50 bps lower than our expectations, on
| Crore FY17 FY18 FY19E FY20E account of 11% QoQ increase in marketing expenses
Net Sales 95,468 83,880 83,845 91,553  Revenues for Africa unit came in at | 5284.1 crore, better than our
EBITDA 35,330 30,257 28,406 32,868
expectations of | 5196 crore, partially aided by rupee depreciation
Net Profit 3,800 1,013 542 1,901
while margins at 36.3% were also higher than our expectation of 35%
EPS (|) 9.5 2.5 1.4 4.8
 PAT came in at | 97.3 crore against our expectation of loss of | 309.1
crore aided by deferred tax credit of | 1844.3 crore, which led to
Valuation summary
negative tax of | 1127 crore, on a net basis. There was also
FY17 FY18 FY19E FY20E
P/E 38.4 143.9 268.9 76.7
exceptional charge of | 362.1 crore, on account of network re-farming
Target P/E 44.7 167.7 313.3 89.4 cost, internal restructuring and integration related one-time expenses
EV / EBITDA 7.1 8.1 9.0 7.7 Weak underlying performance in Indian wireless business…
P/BV 2.2 2.1 2.3 2.3
The underlying performance during the quarter was weak as ARPU
RoNW (%) 7.4 2.6 1.4 3.0
(adjusted for Telenor integration) came in at 109, down ~6% QoQ, clearly
RoCE (%) 8.4 5.7 4.5 6.3
indicating that downtrading impact persists. Furthermore, Indian mobility
margin also declined 210 bps QoQ to 26.3%. We note that while the
Stock data
industry has clearly moved to 3+1 structure, the price competition could
Particulars Amount
continue for some time either on account of Jio’s feature phone addition
Market Capitalisation (| Crore) 145,785
Total Debt (| Crore) 111,334
or to grab market share from Vodafone-Idea, during integration. We
Cash (| Crore) 4,789 expect meaningful pricing from FY20 onwards and expect Indian wireless
EV (| Crore) 234,114 business monthly ARPU to trend up to | 113 in FY20E vs. | 105 currently.
52 week H/L 592/ 331 Africa – strong performance continues…
Equity capital 1,998.7 Africa continued its strong performance with revenues (in rupee terms)
Face value 5.0 witnessing 6.3% QoQ growth (partly aided by currency depreciation)
coupled with improvement in margins with reported margins of 36.3%
Research Analyst during the quarter. Going ahead, we build in margins of 35.3% and 33.5%
Bhupendra Tiwary for Africa business in FY19E and FY20E, respectively. Furthermore, we
bhupendra.tiwary@icicisecurities.com also believe that listing of the African subsidiary on foreign bourses is
likely to be one of the mode of monetisation as a medium term step of
Sameer Pardikar
debt reduction initiative.
sameer.pardikar@icicisecurities.com
Industry recovery still some time away…
We note that while consolidation is largely complete, pricing recovery is
still some time away amid Jio’s continued intent to capture subscriber
market share and a possible opportunity for market share grab during
Vodafone-Idea integration. However, considering the structural change in
the industry in the form of consolidation and consequent benefit of the
efficiency (albeit over medium term), we maintain our positive stance on
Bharti Airtel. We maintain our BUY recommendation on the stock with a
DCF based target price of | 425, which implies 8.5x FY20E EV/EBITDA on
consolidated basis.

ICICI Securities Ltd | Retail Equity Research

Variance analysis Exhibit 1: India Subscriber details
Q1FY19 Q1FY19E Q1FY18 Q4FY18 YoY (%) QoQ (%) Comments
Revenue 20,080.0 19,872.8 21,958.1 19,634.3 -8.6 2.3 Topline was higher as both India wireless and Africa business performed
well during the quarter

Employee Expenses 965.6 978.1 1,014.7 994.9 -4.8 -2.9

Marketing Expenses 3,492.2 3,178.9 3,404.5 3,144.8 2.6 11.0
Access Charges 2,135.5 2,153.1 2,501.6 2,028.8 -14.6 5.3
Network Operating 5,067.7 4,955.2 5,161.2 4,807.1 -1.8 5.4
License Fee 1,697.2 1,749.5 2,082.0 1,747.6 -18.5 -2.9

EBITDA 6,721.8 6,750.6 7,794.1 6,911.1 -13.8 -2.7

EBITDA Margin (%) 33.5 34.0 35.5 35.2 -202 bps -172 bps Margin was lower than our expectations, on account of an increase in
marketing expenses
Depreciation 5,145.2 4,939.1 4,819.2 4,899.1 6.8 5.0
Interest 2,126.6 2,029.3 1,827.4 1,829.3 16.4 16.3
Exceptional Items 362.1 0.0 50.3 324.7 619.9 11.5
Exceptional charge was on account of network re-farming cost, internal
restructuring, and integration related one-time expenses
Source: Company, ICICIdirect.com Research
Total Tax -1,126.7 95.3 813.6 -302.1 -238.5 273.0
PAT 97.3 -309.1 367.3 82.9 -73.5 17.3 PAT came in higher aided by deferred tax credit
Exhibit 2: Data volume, data subscribers trend
*

Subscribers (Mn) 344.6 333.1 280.6 304.2 22.8 13.3

ARPU 105 106 154 116 -31.8 -8.8 ARPU erosion was owing to continued pricing pressure and integration of
low ARPU Telenor customers
Source: Company, ICICI Direct Research

Change in estimates
FY19E FY20E
(| Crore) Old New % Change Old New % Change Comments
Revenue 86,150.4 83,844.7 -2.7 95,668.2 91,553.4 -4.3

EBITDA 31,337.3 28,406.4 -9.4 36,257.6 32,867.9 -9.3 We lower our estimates for Indian mobility margins as we build in higher marketing
and network opex
EBITDA Margin (%) 36.4 33.9 -250 bps 37.9 35.9 -200 bps
PAT 1,359.6 542.2 -60.1 3,413.7 1,901.2 -44.3
EPS (|) 3.4 1.4 -60.1 8.5 4.8 -44.0
Source: Company, ICICI Direct Research Source: Company, ICICIdirect.com Research
Assumptions
Current Earlier
FY16 FY17E FY18 FY19E FY20E FY19E FY20E
India
Wireless Subs (Man) 251.2 273.6 304.2 357.1 374.6 332.0 332.0
ARPU 193.0 177.0 132.4 110.3 113.0 118.3 135.4
Total Minutes (Bn) 1,171.4 1,339.7 1,946.3 2,778.1 2,890.9 2,430.5 2,529.2

MOU 409.1 425.4 561.4 700.1 658.5 636.7 592.3

Africa
Subscriber base 80.6 80.1 89.3 94.2 98.5 93.3 97.4
ARPU ($) 4.3 3.8 3.1 2.9 2.9 3.1 3.1
Total Minutes 136.0 141.8 162.0 230.5 335.0 225.5 309.8
MoU 144.6 147.1 159.5 209.4 289.7 205.9 270.8

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 2

 Exhibit 1: India subscriber details

410 3,500
2,778 2,891
360 3,000
310 1,171 1,946
2,500
260 1,340

(in Billion)
2,000

In Million
375
210
357 1,500
160 304
251 274
110 1,000

60 500
10 0
FY16 FY17 FY18 FY19E FY20E

Mobile Subscribers Total Minutes (Billion)

Source: Company, ICICI Direct Research

Exhibit 2: Data volume, data subscribers trend

106.8
12010 120.0
100.0
10010 86.1 100.0

8010 80.0
58.2 57.4
Billion MB

Million
6010 60.0

4010 40.0

2010 20.0
733 3,902 9,278 10,667
10 498 -
FY16 FY17 FY18 FY19E FY20E

Data Volume Data Subscribers (RHS)

*

Source: Company, ICICI Direct Research

Exhibit 3: India mobile ARPU trend

200 193

180 177
|

160

140 132

120
113
100 110
FY16 FY17 FY18 FY19E FY20E

ARPU
*

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 3

 Exhibit 4: Africa business details (US$ million)
Particulars FY16 FY17 FY18 FY19E FY20E
Total revenues 4,055.7 3,638.9 3,118.5 3,234.4 3,395.9
EBITDA 852.3 869.4 1,031.0 1,140.3 1,205.9
EBITDA % 21.0% 23.9% 33.1% 35.3% 35.5%
Source: Company, ICICI Direct Research

Other Highlights
 Management terms current ARPU unsustainable; expects ARPU
recovery in the near term: The management indicated that current
ARPU levels in the industry look unsustainable and further
downward revision in ARPU would have a further adverse impact
on the already declining industry revenues. They indicated that
the industry may see upward pricing revision in the near term
(~six months) since the market will now be consolidated into a
desired structure of three equally large players

 Telenor acquisition completed as per plan; NCLT approval

awaited for Tata acquisition: The management indicated that
Telenor acquisition has been completed as per plan. Also, 28 mn
customers were added to the Airtel network and | 150 crore of
revenue was booked during the quarter as a result of the
integration. The management indicated the company added 1800
MHz spectrum in six circles, which can be used for capacity
expansion with marginal cost. They also indicated that during the
integration process, they lost 3 mn Telenor customers

 Capex looks elevated in Q1 on front loading; capex guidance

maintained for FY19: The management indicated that capex for
Q1FY19 may look higher because of front loading but capex
guidance for FY19 was maintained in the range of | 27000-28000
crore. The management indicated that capex for the quarter was
largely spent on TDD 2300 MHz capacity expansion and on fibre.
They indicated that further capex would be spent on FDD network
rollout, refarming of 900 MHz band for 4G use and to fiberise the
network

 Content to remain complimentary in the near term; Monetization

an uphill task: The management indicated that in order to retain
high-end customers, they are offering some value added products
like complimentary subscription to Amazon, Netflix, etc. The
management indicated that these kind of value added offerings
would remain complimentary in the near term. They are not
looking to charge them separately since monetisation of the same
is still an uphill task

 Not looking to push feature phone aggressively; not worried

about shedding few low ARPU feature phone customers: The
management indicated they are not seeing any rush for Jio’s
feature phone despite attractive offering from the competition.
They indicated they are not looking to push feature phones
aggressively considering the subsidy attached to it and are fine to
shed some customers in this category. The management also
indicated they have not yet seen much success for the postpaid
plan launched by Jio recently

ICICI Securities Ltd | Retail Equity Research Page 4

  Voice, data usage growth to be slower; VoLTE launch almost
complete: The management indicated that data and voice usage
per customer grew at a faster rate till now on account of bundled
offering value proposition. However, growth is expected to slow
down in the near future. The management indicated that barring
two circles, VoLTE has been launched in 20 circles already

 Focusing on high rise in fixed broadband space: The

management indicated they are looking for additional 2 mn home
passes in FY19. Their preference remains on high rise buildings
over flat structure

ICICI Securities Ltd | Retail Equity Research Page 5

 Valuation
We note that while consolidation is largely complete, pricing recovery is
still some time away amid Jio’s continued intent to capture subscriber
market share and a possible opportunity for market share grab during
Vodafone-Idea integration. However, considering the structural change in
the industry in the form of consolidation and consequent benefit of the
efficiency (albeit over medium term), we maintain our positive stance on
Bharti Airtel. We maintain our BUY recommendation on the stock with a
DCF based target price of | 425, which implies 8.5x FY20E EV/EBITDA on
a consolidated basis.

Exhibit 5: Valuations
Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 95,468.3 -1.2 9.5 -30.7 38.1 7.0 7.4 8.4
FY18 83,879.8 -12.1 2.5 -73.3 142.8 8.1 2.6 5.7
FY19E 83,844.7 0.0 0.9 -63.7 393.5 9.1 1.1 4.3
FY20E 91,553.4 9.2 4.8 424.2 75.1 7.6 3.0 6.4
Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 6

Recommendation History vs. Consensus
80.0
640
70.0

530 60.0
50.0
(|)

40.0

(%)
420
30.0
310 20.0
10.0
200 0.0
Jul-15 Sep-15 Dec-15 Feb-16 May-16 Jul-16 Oct-16 Dec-16 Mar-17 May-17 Jul-17 Oct-17 Dec-17 Mar-18 May-18 Jul-18

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICI Direct Research

Key events
Date Event
Feb-12 Supreme court cancels licenses - 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
May-13 Bharti recieves $1.26 billion investments from Qatar Foundation
Jun-13 Pricing power returns to operators. ARPMs starts showing upward momentum
Dec-13 Enters into infrastructure sharing arrangement with Reliance Jio Infocomm
Feb-14 February 2014 auctions held for 900/1800 MHz spectrum with a total outlay for Airtel involving | 18530 crore & industry outlay involving | 61162 crore

Jun-14 The company divests its 3100 towers from its African towers to Helios Towers
Mar-15 Auctions held for 800, 900, 1800, 2100 MHz band. Total payout for Airtel is of | 29130 crore
Mar-16 Bharti Airtel (Airtel) enters into definitive agreement with Videocon Telecommunications to acquire the right to use spectrum (2*5 MHz
Apr-16 spectrum in the
Bharti Airtel 1800
enters intoMHz band) in agreement
a definitive its six circles of Aircel
with Bihar, Ltd
Haryana,
and itsMadhya Pradesh,
subsidiaries UP (East),
to acquire UP (West)
the right to use and Gujarat(20
spectrum forMHz
a consideration
spectrum inofthe| 2300
4428 MHz
croreband) in
its eight circles of Tamil Nadu (including Chennai), Bihar, Jammu & Kashmir, West Bengal, Assam, North East, Andhra Pradesh and Odisha for a consideration of ~|
3500 crore
Oct-16 Bharti Airtel successfully fortifies its data presence by acquiring a total of 173.8 MHz spectrum across 1800, 2100, 2300 MHz bands for a total of | 14,244 crore and
has 4G and 3G presence in all its circles
Source: Company, ICICI Direct Research

Top 10 Shareholders Shareholding Pattern

Rank Name Latest Filling Date % O/S Position (m) Change (m) (in %) Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
1 Bharti Enterprises, Ltd. 30-Jun-18 52.13 2,084.0 0.0 Promoter 67.14 67.14 67.14 67.14 67.14
2 Singapore Telecommunications Ltd 30-Jun-18 15.01 599.8 0.0 FII 16.16 16.37 18.78 18.45 18.27
3 Life Insurance Corporation of India 30-Jun-18 3.76 150.2 0.0 DII 10.25 9.86 12.02 12.30 12.48
4 ICICI Prudential Asset Management Co. Ltd. 30-Jun-18 2.11 84.3 21.1 Others 6.45 6.63 2.06 2.11 2.11
5 SBI Funds Management Pvt. Ltd. 30-Jun-18 1.38 55.1 2.1
6 ICICI Prudential Life Insurance Company Ltd. 30-Jun-18 1.18 47.4 -3.8
7 The Vanguard Group, Inc. 30-Jun-18 1.12 44.8 0.2
8 Franklin Templeton Asset Management (India) Pvt. Ltd. 31-May-18 1.07 42.8 1.9
9 BlackRock Institutional Trust Company, N.A. 30-Jun-18 0.95 38.0 -2.1
10 Dimensional Fund Advisors, L.P. 30-Jun-18 0.72 28.7 0.1
Source: Reuters, ICICI Direct Research

Recent Activity
Buys Sells
Investor name Value Shares Investor name Value Shares
ICICI Prudential Asset Management Co. Ltd. +117.68M +21.09M Capital World Investors -102.81M -16.80M
Norges Bank Investment Management (NBIM) +110.64M +13.33M ICICI Prudential Life Insurance Company Ltd. -21.35M -3.83M
Reliance Nippon Life Asset Management Limited +11.98M +2.15M Kotak Mahindra Asset Management Company Ltd. -17.62M -3.18M
SBI Funds Management Pvt. Ltd. +11.71M +2.10M BlackRock Institutional Trust Company, N.A. -11.94M -2.14M
Franklin Templeton Asset Management (India) Pvt. Ltd. +10.26M +1.85M Grantham Mayo Van Otterloo & Co LLC -12.86M -1.96M
Source: Reuters, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 7

Financial summary
Profit and loss statement | Crore Cash flow statement | Crore
(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Total operating Income 95,468.3 83,879.8 83,844.7 91,553.4 Profit after Tax 3,799.8 1,013.0 542.2 1,901.2
Growth (%) -1.2 -12.1 0.0 9.2 Add: Depreciation 19,773.0 19,243.1 19,703.5 20,599.5
Employee Expenses 4,303.2 3,977.1 3,835.5 4,233.0 Add: Interest Paid 7,829.3 8,349.4 8,482.1 8,565.9
Marketing Expenses 14,473.9 13,293.4 13,942.0 14,176.2 (Inc)/dec in Current Assets (845.7) (4,807.5) 285.1 (1,979.2)
Access Charges 10,278.6 9,044.6 9,058.0 9,506.2 Inc/(dec) in CL and Provisions -2,368.9 6,694.6 538.2 2,549.9
Network Operating 21,806.8 19,752.0 20,886.9 21,978.4 Others 0.0 0.0 0.0 0.0
License Fee 9,276.0 7,555.8 7,511.5 8,416.4 CF from operating activities 28,187.5 30,492.6 29,551.1 31,637.3
Other Costs 0.0 0.0 0.0 0.0 (Inc)/dec in Investments -2,772.1 -3,293.8 0.0 0.0
Other expenses - - 204.4 375.3 (Inc)/dec in Fixed Assets -27,120.3 -27,122.1 -27,000.0 -21,000.0
Total Operating Expenditure 60,138.5 53,622.9 55,438.3 58,685.5 Others -2,968.1 6,472.1 1,841.3 2,172.7
EBITDA 35,329.8 30,256.9 28,406.4 32,867.9 CF from investing activities -32,860.5 -23,943.9 -25,158.7 -18,827.3
Growth (%) 3.6 -14.4 -6.1 15.7 Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0
Depreciation 19,773.0 19,243.1 19,703.5 20,599.5 Inc/(dec) in loan funds 46,527.4 3,905.4 5,500.0 -2,000.0
Interest 7,829.3 8,349.4 8,482.1 8,565.9 Dividend paid & dividend tax -467.7 -2,497.5 -2,104.6 -2,104.6
Other Income 120.6 248.8 399.7 400.0 Interest Paid 7,829.3 8,349.4 8,482.1 8,565.9
Exceptional Items 1,169.7 793.1 362.1 - Others -51,306.9 -13,136.2 -20,526.8 -17,131.8
PBT 6,678.4 2,120.1 258.4 4,102.5 CF from financing activities 2,582.1 -3,378.8 -8,649.4 -12,670.6
MI / Profit from associates -603.3 23.6 -383.2 -183.0 Net Cash flow -2,091.0 3,170.0 -4,257.1 139.5
Total Tax 3,481.9 1,083.5 99.4 2,384.2 Opening Cash 3,708.7 1,617.8 4,787.7 530.7
PAT 3,799.8 1,013.0 542.2 1,901.2 Closing Cash 1,617.8 4,787.7 530.7 670.1
Growth (%) -30.7 -73.3 -46.5 250.7 Source: Company, ICICI Direct Research
EPS (|) 9.5 2.5 1.4 4.8
Source: Company, ICICI Direct Research

Balance sheet | Crore Key ratios

(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Liabilities Per share data (|)
Equity Capital 1,998.7 1,998.7 1,998.7 1,998.7 EPS 9.5 2.5 1.4 4.8
Reserve and Surplus 65,457.6 67,535.7 62,410.7 62,207.3 Cash EPS 59.0 50.7 50.6 56.3
Total Shareholders funds 67,456.2 69,534.4 64,409.4 64,206.0 BV 168.8 173.9 161.1 160.6
Total Debt 107,428.1 111,333.5 116,833.5 114,833.5 DPS 1.2 6.2 5.3 5.3
Deferred Tax Liability 943.1 1,060.6 1,060.6 1,060.6 Cash Per Share 4.0 12.0 1.3 1.7
Others 11,769.0 16,804.7 18,646.0 20,818.7 Operating Ratios
Total Liabilities 187,596.4 198,733.2 200,949.5 200,918.7 EBITDA Margin (%) 37.0 36.1 33.9 35.9
EBIT Margin (%) 16.3 13.1 10.4 13.4
Assets PAT Margin (%) 5.2 2.2 1.1 2.1
Gross Block 317,858.3 344,979.4 371,980.4 392,980.4 Inventory days 0.2 0.3 0.3 0.3
Less: Acc Depreciation 128,784.7 148,027.8 167,731.3 188,330.9 Debtor days 19.1 25.6 25.6 25.6
Net Block 189,073.6 196,951.6 204,249.1 204,649.6 Creditor days 102.7 120.8 123.2 104.0
Investments 16,967.0 20,260.8 20,260.8 20,260.8 Return Ratios (%)
Inventory 48.8 69.3 69.3 75.6 RoE 7.4 2.6 1.4 3.0
Debtors 4,983.8 5,883.0 5,880.5 6,421.2 RoCE 8.4 5.7 4.5 6.3
Loans and Advances 4,410.5 10,338.0 10,333.7 11,283.8 RoIC 8.8 6.1 4.7 6.6
Other Current Assets 7,561.9 5,522.3 5,244.0 5,726.1 Valuation Ratios (x)
Cash 1,617.7 4,788.6 530.7 670.1 P/E 38.4 143.9 268.9 76.7
Total Current Assets 18,622.8 26,601.2 22,058.1 24,176.8 EV / EBITDA 7.1 8.1 9.0 7.7
Creditors 26,853.7 27,767.5 28,311.0 26,086.4 EV / Net Sales 2.6 2.9 3.0 2.8
Provisions 221.5 238.4 243.1 224.0 Market Cap / Sales 1.5 1.7 1.7 1.6
Other Current Liabilities 18,078.6 23,842.5 23,832.5 28,626.1 Price to Book Value 2.2 2.1 2.3 2.3
Total Current Liabilities 45,153.8 51,848.4 52,386.6 54,936.5 Solvency Ratios
Net Current Assets -26,531.1 -25,247.2 -30,328.4 -30,759.7 Debt/EBITDA 3.0 3.7 4.1 3.5
Others Assets 8,086.9 6,768.0 6,768.0 6,768.0 Debt / Equity 1.6 1.6 1.8 1.8
Application of Funds 187,596.4 198,733.2 200,949.5 200,918.7 Current Ratio 0.4 0.4 0.4 0.4
Source: Company, ICICI Direct Research Quick Ratio 0.4 0.4 0.4 0.4
Source: Company, ICICI Direct Research
.

ICICI Securities Ltd | Retail Equity Research Page 8

ICICI Direct Research coverage universe (Telecom)
CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
Sector / Company (|) TP(|) Rating (| Cr) FY17 FY18 FY19E FY17 FY18 FY19E FY17 FY18 FY19E FY17 FY18 FY19E FY17 FY18 FY19E
Bharti Airtel (BHAAIR) 365 425 Buy 145,785 9.5 2.5 1.4 38.4 143.9 268.9 7.1 8.1 9.0 8.4 5.7 4.5 7.4 2.6 1.4
Bharti Infratel (BHAINF) 289 300 Hold 53,537 14.9 13.5 13.2 19.5 21.5 22.0 8.7 7.6 8.3 20.1 21.1 20.2 17.7 14.7 15.2
Idea Cellular (IDECEL) 56 63 Hold 24,565 -1.1 -9.6 -13.7 NM NM NM 7.3 12.7 23.9 3.3 -2.3 -5.4 -1.6 -15.3 -28.1
Sterlite Tech. (STETEC) 343 400 Buy 13,670 5.1 8.4 12.3 67.9 40.9 27.9 28.2 19.4 14.1 16.1 21.6 24.4 22.9 29.6 31.9
Tata Comm. (TATCOM) 568 690 Hold 16,201 43.3 -11.5 7.9 13.1 NM 71.5 9.8 10.3 9.8 6.1 5.9 6.4 17.2 9.4 46.2
Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 9

RATING RATIONALE
ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research
assigns 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

ICICI Direct 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

ANALYST CERTIFICATION
We /I, Bhupendra Tiwary MBA, Sameer Pardikar, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately
reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this
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ICICI Securities Ltd | Retail Equity Research Page 11