Sector Update

September 2, 2016

Telecom

Rating matrix- Bharti Airtel

Rating
Target
Target Period
Potential Upside

:
:
:
:

Hold
| 315
12 months
1%

Enters JioInvestors anxious!!!

Whats changed ? Bharti Airtel

Target
EPS FY17E
EPS FY18E
Rating

Changed from | 435 to | 315

Changed from | 14.2 to | 12.4
Changed from | 20.1 to | 14.8
Changed from Buy to Hold

Valuation summary- Bharti Airtel

P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)

FY15
24.0
24.3
6.2
2.0
9.7
10.3

FY16
22.7
23.0
6.2
1.9
6.1
9.4

FY17E
25.0
25.4
5.9
1.8
7.8
9.9

FY18E
21.1
21.4
5.5
1.7
8.2
10.1

Rating matrix- Idea Cellular

Target
EPS FY17E
EPS FY18E
Rating

Changed from | 100 to | 80

Changed from | 3.1 to | 2.2
Changed from | 5.4 to | 3.1
Unchanged

Whats Changed ?- Idea Cellular

Rating
Target
Target Period
Potential Upside

:
:
:
:

Hold
| 80
12 months
-5%

Valuation summary- Idea Cellular

P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)

We attended the annual general meeting (AGM) of Reliance Industries

(RIL) and witnessed the much awaited announcement from the horses
mouth. Post the trial launch for employees and tie-ups with various
handset providers earlier, Jio has come out with a welcome offer
providing free voice as well as data services from September 5 until
December 31.
Tariff plansmaking voice calling free proposition
Jio also unveiled tariff plans that would be applicable from January, 2017.
The lowest tariff plan starts at | 149 giving 0.3 GB of data and unlimited
free voice calling, which is likely to attract customers with higher voice
usage. Other tariff plans range from | 499 to | 4999 offering 4 GB and 75
GB of data at a per MB data realisation of 12 paisa and 6.6 paisa,
respectively (excluding Wi-Fi and unlimited download benefits during
night). Data tariffs are at a significant discount to the industry average of
19-20 paisa with an added icing on the cake of unlimited voice minutes
with free SMS. They are also embedded with unlimited night LTE data
and bundled Wi-Fi data. The company also announced a special offer for
students wherein tariff would be 25% cheaper for students with a valid ID.
Jio offerings innovative but what about business viability?

FY15
9.4
9.0
5.1
1.3
13.9
11.3

FY16
9.8
9.3
5.2
1.2
12.0
9.4

FY17E
34.9
33.3
5.7
1.1
3.3
6.6

FY18E
32.4
30.9
5.8
1.1
3.4
6.4

Price performance
Bharti Airtel
RCOM
Idea

1M
-14.5
-5.3
-19.7

3M
-14.4
-0.2
-28.7

6M
-3.1
-8.7
-20.8

12M
-10.0
-14.6
-44.1

Research Analysts
Bhupendra Tiwary
bhupendra.tiwary@icicisecurities.com

Sneha Agarwal
sneha.agarwal@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

We appreciate that Jios offering of voice & SMS is innovative as it

introduces a billing for one service only i.e., data vs. current norms
of billing for voice, data and SMS separately. Furthermore, the
implied data realisation of 12.5-6.7 paisa/MB, is lower than ~20
paisa/MB for incumbents
However, we highlight that Jios free voice offering would also entail
a cost in the form of interconnect charges wherein Jio would have to
make a payment of 14 paisa per minute on any calls that land on any
other telecom operators network
Though the lowest | 149 pack with free voice calling and 0.3 GB is
attractive, another deterrent to Volte adoption is low penetration of
4G and Volte enabled smartphones. We note that though the tariff
plans and other lifestyle applications on the mobile make it a highly
attractive proposition, the low smartphone penetration of ~24% with
~250 million smartphone users in India would make the journey
difficult for Jio. In addition, the requirement of phones being 4G and
VoLTE enabled, poses another challenge for SIM demand despite
the free offers till December 31. While the company is offering LYF
VoLTE enabled 4G handsets for | 2,999 and above & Jio Fi (portable
Wi-Fi/MiFi) at | 1,999, the additional cost remains a disincentive
Reliance Jio is targeting 100 million users and 250 crore GB per
month implying data consumption/user of 25 GB/month. We note
that current data consumption for incumbents is at sub 1 GB levels.
Furthermore, 25 GB/month usage implies @ 50 paisa/MB that implies
data ARPU of | 1250 vs. Incumbents data ARPU of | 200 for Airtel
and | 142 for Idea. Therefore, the implied data usage target itself is a
tall ask at least for the next couple of years
We also remain sceptical on the return generation given a huge
capex of over | 1.3 lakh crore and an imminent cash burn over the
next couple of quarters
We also remain cautious if the VoLTE offering would be seamless
when the call is being made outside the Jio network

Will incumbents survive or sail through?

While pre-launch concerns hinged on disruptive data pricing, Jio by

announcing free bundled voice offerings posed a question mark on
the voice revenues of the industry. However, we note that such a
move had been anticipated by incumbents and they had already
announced tariffs with cuts across small data packs, free voice
offering for premium customer and data at 50 paisa/MB with some
initial upfront payment. We believe incumbent operators would have
to come out with further cuts in response to these tariffs to prevent
subscriber churn
With a majority of customers being in the sub | 200 ARPU bracket
for incumbents, we believe the pricing cut would be aimed to the
capture of voice and data needs of customers nearing the lowest
plan by Jio. We also note that though the lowest tariff plan by Jio
offers free voice, data is limited to 0.3 GB
We now factor in a ~27% decline in data realisations per MB over
FY16-18E for both Bharti Airtel and Idea Cellular. Though the decline
in data tariffs would hurt, it would also drive an increase in data
consumption at ~60% CAGR for Airtel & Idea, in FY16-18. Voice tariff
estimates have also been curtailed by ~5% CAGR as we believe
incumbents would also offer some free voice minutes in response to
the free voice service offered by Jio
Maintain neutral stance on sector amid uncertain times
While incumbents are yet to respond, we do envisage either a price cut or
some innovative bundled offering to counter the same. We also believe
that while the rock bottom pricing by Jio would cause a churn of second
SIM users in the near term for incumbents, long term viability of such
tariffs remains dismal. We maintain our neutral stance on the sector as
the next couple of quarters are likely to put pricing pressure on
incumbents. Furthermore, the spectrum auction would put an additional
dent on their balance sheets. We have revised our estimates for Airtel and
Idea factoring in the imminent price cuts. The impact on Idea is seen to be
more pronounced as its entire revenues come in from the Indian mobility
segment unlike Airtel that has inflows from other geographies and
businesses. We now rate both Airtel and Idea as HOLD with a target price
of | 315 and | 80, respectively.
Exhibit 1: Reliance Jio tariff plans
Plan Type
Tariff (|)
Free Voice (Domestic & Roaming)
4G Data (GB)
Unlimited Data usage at Night
Per GB rate (|)
Unlimited SMS
WiFI (JioNet Hotspot) - GB
Unlimited Jio Apps Subsciption
Validity (Days)

S
149
Yes
0.3
No
497
100
NA
Yes
28

M
499
Yes
4
Yes
125
Yes
8
Yes
28

M
999
Yes
10
Yes
100
Yes
20
Yes
28

L
1499
Yes
20
Yes
75
Yes
40
Yes
28

XL
2499
Yes
35
Yes
71
Yes
70
Yes
28

XXL
3999
Yes
60
Yes
67
Yes
120
Yes
28

XXXL
4999
Yes
75
Yes
67
Yes
150
Yes
28

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Change in estimates Bharti Airtel

(| Crore)
Revenue
EBITDA
EBITDA Margin (%)
PAT
EPS (|)

Old
102,621.0

FY17E
FY18E
New % Change
Old
New
99,714.8
-2.8 112,116.6 105,477.0

38,304.7
37.3
5,691.1

36,343.4
36.4
4,961.4

-5.1
-88 bps
-12.8

42,287.8
37.7
8,050.2

37,814.2
35.9
5,900.1

14.2

12.4

-12.8

20.1

14.8

% Change Comments
-5.9 The Indian mobility revenues would be impacted with the cut in both the voice and
data tariffs in response to the competition.
-10.6
-187 bps The major hit in EBITDA would be a result of lower data and voice tariffs
-26.7
-26.7 The earnings have been impacted due to the competitive pressures in the Indian
mobility.

Source: Company, ICICIdirect.com Research

Change in estimates- Idea Cellular

(| Crore)
Revenue

Old
38,108.2

FY17E
New % Change
Old
37,216.0
-2.3 41,002.9

FY18E
New % Change Comments
37,470.7
-8.6 The mobility business would face a loss in revenues owing to the cut in both the voice
and data tariffs in response to the competition. The impact in Idea is more pronounced
as compared to Airtel as majority of its revenues comes in from the Indian mobility,
versus Airtel having revenues from Africa and other businesses

EBITDA
EBITDA Margin (%)

12,412.6
32.6

11,808.5
31.7

11,685.3
31.2

1,114.5
3.1

864.4
2.4

PAT
EPS (|)

-4.9 13,999.8
-84 bps
34.1
-22.4
-22.4

1,955.2
5.4

930.9
2.6

-16.5
-296 bps The stark reduction in the data tariffs as well as voice tariffs would lead to dilution in the
margins
-52.4
-52.4 The earnings have been impacted due to the competitionary pressures in its operational
environment.

Source: Company, ICICIdirect.com Research

Few other highlights of Jio launch

1. The Jio Network currently covers 18,000 cities/towns and over
200,000 villages. The company plans to cover 90% of Indias
population via its network by March 2017. It plans to roll-out Wi-Fi
hotspots in 1 million touch points and would be undertaking an
aggressive fibre to home initiative. Jio has already partnered with
5 lakh retail touch points
2. Students having a valid ID card proof will be able to access 25%
more data on similar Jio tariffs. The company would further focus
on connecting schools and colleges through its Wi-Fi offerings
3. Jio is also targeting the enterprise segment and would be keen on
offering them unique solutions at competitive prices
4. Apart from tariffs as explained above, smartphone prices under
the brand Lyf would also be available in low variants starting from
| 2999 and increasing in denominations of | 1000 thereof as per
embedded features
5. The company would be offering a suite of applications to the Jio
subscriber, which would include Anytime Jio TV covering about
300 Live channels, Jio Cinema hosting ~6000 movies, 60000
music videos and 1 lakh episodes across languages
6. The company intends to help the subscriber with seamless
activation in 15 minutes with the help of Aadhaar related e-KYC

ICICI Securities Ltd | Retail Equity Research

Page 3

Outlook and valuation

While incumbents are yet to respond, we do envisage either a price cut or
some innovative bundled offering to counter the same. We also believe
that while the rock bottom pricing by Jio would cause a churn among
second SIM users in the near term for incumbents, long term viability of
such tariffs remains dismal. We maintain our neutral stance on the sector
as the next couple of quarters are likely to put pricing pressure on
incumbents. Furthermore, the spectrum auction would put an additional
dent on their balance sheets. We have revised our estimates for Airtel and
Idea factoring in the imminent price cuts. The impact on Idea is seen to be
more pronounced as it has entire revenues coming in from the Indian
mobility segment unlike Airtel that has inflows from other geographies
and businesses. We now rate both Airtel and Idea as HOLD with a target
price of | 315 and | 80, respectively.
Exhibit 2: DCF assumptions- Bharti Airtel
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
10.5%
6.9%
51,668.1
3.8%
162,731.1
214,399.2
88,328.4
126,070.7
399.7
315

Source: Company, ICICIdirect.com Research

Exhibit 3: Valuations- Bharti Airtel

FY15
FY16
FY17E
FY18E

Sales
(| cr)
92,135.1
96,619.3
99,714.8
105,477.0

Growth
(%)
7.3
4.9
3.2
5.8

EPS
(|)
13.0
13.7
12.4
14.8

Growth
(%)
86.9
5.8
-9.5
18.9

PE
(x)
24.0
22.7
25.0
21.1

EV/EBITDA
(x)
6.2
6.2
5.9
5.5

RoNW
(%)
9.7
6.1
7.8
8.2

RoCE
(%)
10.3
9.4
9.9
10.1

RoNW
(%)
13.9
12.0
3.3
3.4

RoCE
(%)
11.3
9.4
6.6
6.4

Source: Company, ICICIdirect.com Research

Exhibit 4: DCF Assumptions- Idea Cellular

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
10.7%
6.3%
-22.7
3.8%
65,449.7
65,427.0
36,660.4
28,766.7
360.0
80

Source: Company, ICICIdirect.com Research

Exhibit 5: Valuations- Idea Cellular

FY15
FY16
FY17E
FY18E

Sales
(| cr)
31,570.9
35,981.0
37,216.0
37,470.7

Growth
(%)
19.1
14.0
3.4
0.7

EPS
(|)
8.9
8.6
2.4
2.6

Growth
(%)
49.7
-3.6
(71.9)
7.7

PE
(x)
9.4
9.8
34.9
32.4

EV/EBITDA
(x)
5.1
5.2
5.7
5.8

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Financial summary- Bharti Airtel

Profit and loss statement
(Year-end March)
Total operating Income
Growth (%)
Employee Expenses
Marketing Expenses
Access Charges
Network Operating
License Fee
Other Costs
Other expenses
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
Exceptional Items
PBT
MI / Profit from associates
Total Tax
PAT
Growth (%)
EPS (|)

| Crore
FY15
92,135.1
7.3
4,712.3
15,553.3
11,275.9
20,394.4
8,746.9
129.0
60,811.8
31,323.3
12.8
15,531.1
5,005.5
0.0
796.0
9,990.7
-597.5
5,404.7
5,183.5
86.9
13.0

FY16E
96,619.3
4.9
4,911.2
15,998.7
10,942.3
21,166.8
9,492.7
14.2
62,525.9
34,093.4
8.8
17,449.8
6,988.9
0.0
(1,450.5)
11,105.2
-315.9
5,936.8
5,484.3
5.8
13.7

FY17E
99,714.8
3.2
4,255.7
15,396.5
10,555.5
23,402.0
9,893.9
0.0
(132.2)
63,371.4
36,343.4
6.6
18,646.7
7,825.3
0.0
353.6
9,517.8
-677.2
5,233.7
4,961.4
-9.5
12.4

FY18E
105,477.0
5.8
4,379.9
16,316.5
10,911.7
25,709.2
10,287.1
0.0
58.3
67,662.7
37,814.2
4.0
19,724.2
7,340.4
0.0
10,749.6
-558.8
5,408.3
5,900.1
18.9
14.8

Cash flow statement

| Crore

(Year-end March)
FY15
Profit after Tax
5,183.5
Add: Depreciation
15,531.1
Add: Interest Paid
5,005.5
(Inc)/dec in Current Assets
(5,131.2)
Inc/(dec) in CL and Provisions
6,403.5
Others
0.0
CF from operating activities
26,992.4
(Inc)/dec in Investments
-1,373.7
(Inc)/dec in Fixed Assets
-25,060.6
Others
-1,166.5
CF from investing activities
-27,600.8
Issue/(Buy back) of Equity
0.0
Inc/(dec) in loan funds
-9,528.6
Dividend paid & dividend tax
-1,800.6
Interest Paid
5,005.5
Others
3,123.2
CF from financing activities
-3,200.5
Net Cash flow
-3,809.0
Opening Cash
4,980.8
Closing Cash
1,171.8
Source: Company, ICICIdirect.com Research

FY16E
5,484.3
17,449.8
6,988.9
150.3
5,218.2
0.0
35,291.4
4,442.7
-49,032.1
6,275.2
-38,314.2
0.0
-5,466.6
-636.1
6,988.9
4,673.4
5,559.7
2,536.9
1,171.8
3,708.7

FY17E
4,961.4
18,646.7
7,825.3
1,457.2
-2,961.3
0.0
29,929.3
-700.0
-20,000.0
388.8
-20,311.2
0.0
-2,000.0
-2,104.6
7,825.3
-15,650.7
-11,930.0
-2,311.9
3,708.7
1,396.8

FY18E
5,900.1
19,724.2
7,340.4
(360.7)
2,575.0
0.0
35,179.1
-500.0
-20,000.0
130.9
-20,369.1
0.0
-4,000.0
-2,104.6
7,340.4
-14,680.9
-13,445.1
1,364.9
1,396.8
2,761.7

FY15

FY16E

FY17E

FY18E

13.0
51.8
155.0
4.5
2.9

13.7
57.4
164.2
1.6
9.3

12.4
59.1
171.3
5.3
3.5

14.8
64.1
180.8
5.3
6.9

34.0
17.1
6.5
0.5
26.6
134.6

35.3
17.2
4.2
0.6
27.6
146.4

36.4
17.7
5.3
0.6
25.0
130.0

35.9
17.2
5.6
0.6
24.0
130.0

9.7
10.3
11.8

6.1
9.4
10.3

7.8
9.9
10.7

8.2
10.1
11.1

24.0
6.2
2.1
1.3
2.0

22.7
6.2
2.2
1.3
1.9

25.0
5.9
2.1
1.2
1.8

21.1
5.5
2.0
1.2
1.7

2.6
1.3
0.4
0.4

2.8
1.4
0.3
0.3

2.6
1.4
0.3
0.3

2.4
1.2
0.3
0.3

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(Year-end March)
Liabilities
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Others
Total Liabilities

FY15

FY16E

FY17E

FY18E

1,998.7
59,957.7
61,956.4
80,683.9
1,511.0
9,325.9
153,477.2

1,998.7
63,631.4
65,630.1
95,043.0
1,435.6
15,235.7
177,344.4

1,998.7
66,488.1
68,486.8
93,043.0
1,435.6
15,624.5
178,589.9

1,998.7
70,283.6
72,282.3
89,043.0
1,435.6
15,755.4
178,516.3

Assets
Gross Block
Less: Acc Depreciation
Net Block
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Creditors
Provisions
Other Current Liabilities
Total Current Liabilities
Net Current Assets
Others Assets
Application of Funds

241,705.9
91,561.9
150,144.0
18,637.5
133.9
6,725.2
3,182.8
6,267.7
1,171.8
17,481.4
33,967.0
206.1
8,131.5
42,304.6
-24,823.1
9,518.8
153,477.2

290,738.0
109,011.7
181,726.3
14,194.9
169.2
7,310.6
4,883.2
3,796.4
3,708.7
19,868.1
38,745.6
232.6
8,544.6
47,522.8
-27,654.7
9,078.0
177,344.4

310,738.0
127,658.4
183,079.6
14,894.9
174.6
6,829.8
3,779.7
3,918.0
1,396.8
16,098.9
35,514.9
228.2
8,818.4
44,561.5
-28,462.5
9,078.0
178,589.9

330,738.0
147,382.6
183,355.4
15,394.9
184.7
6,935.5
3,798.2
4,144.4
2,761.7
17,824.5
37,567.1
241.4
9,328.0
47,136.5
-29,312.0
9,078.0
178,516.3

Source: Company, ICICIdirect.com 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

ICICI Securities Ltd | Retail Equity Research

Page 5

Financial summary- Idea Cellular

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
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

FY16
35981.0
14.0
1,659.9
4,643.6
8,170.7
4,150.8
3,353.3
972.8
22951.0
13030.0
20.5
6650.8
1881.6
227.1
0.0
4724.7
0.0
1644.7
3079.9
-3.5
8.6

FY17E
37216.0
3.4
1,718.9
4,696.5
10,376.2
4,286.2
3,347.2
982.5
25407.5
11808.5
-9.4
7480.4
3937.7
275.8
0.0
666.2
-459.2
261.0
864.4
-71.9
2.4

FY18E
37470.7
0.7
1,731.2
4,890.5
10,608.1
4,309.1
3,259.0
987.5
25785.4
11685.3
-1.0
7419.2
3900.3
280.0
0.0
645.7
-501.4
216.3
930.9
7.7
2.6

Cash flow statement

| Crore

(Year-end March)
FY15
Profit after Tax
3,192.9
Add: Depreciation
5,303.6
Add: Interest paid
1,045.2
(Inc)/dec in Current Assets
(1,672.7)
Inc/(dec) in CL and Provisions
1,054.3
Others
0.0
CF from operating activities
8,923.4
(Inc)/dec in Investments
-11,311.2
(Inc)/dec in Fixed Assets
-4,962.5
Others
227.6
CF from investing activities
-16,046.0
Issue/(Buy back) of Equity
278.2
Inc/(dec) in loan funds
5,611.8
Dividend paid & dividend tax
-383.8
Interest Paid
-1,045.2
Others
4,027.3
CF from financing activities
8,488.3
Net Cash flow
1,365.6
Opening Cash
188.1
Closing Cash
1,553.7
Source: Company, ICICIdirect.com Research

FY16
3,079.9
6,650.8
1,881.6
589.4
4,609.5
0.0
16,811.2
10,153.7
-40,367.0
3,498.6
-26,714.8
2.7
-12,725.0
-260.0
-1,881.6
23,995.7
9,131.7
-771.9
1,553.7
781.9

FY17E
864.4
7,480.4
3,937.7
(208.4)
423.0
0.0
12,497.1
0.0
-8,000.0
0.0
-8,000.0
0.0
-850.0
-168.5
-3,937.7
84.3
-4,871.9
-374.8
781.9
407.1

FY18E
930.9
7,419.2
3,900.3
(43.0)
87.2
0.0
12,294.6
-1,000.0
-8,000.0
0.0
-9,000.0
0.0
500.0
-168.5
-3,900.3
0.0
-3,568.8
-274.2
407.1
132.9

FY15

FY16

FY17E

FY18E

8.9
23.6
64.0
1.1
4.3

8.6
27.0
71.6
0.7
2.2

2.4
23.2
73.7
0.5
1.1

2.6
23.2
75.9
0.5
0.4

34.2
17.4
10.1
0.8
11.3
79.1

36.2
17.7
8.6
1.1
11.9
114.1

31.7
11.6
2.3
1.1
11.9
114.1

31.2
11.4
2.5
1.1
11.9
114.1

13.9
11.3
12.0

12.0
9.4
10.1

3.3
6.6
7.1

3.4
6.4
6.8

9.4
5.1
1.8
1.0
1.3

9.8
5.2
1.9
0.8
1.2

34.9
5.7
1.8
0.8
1.1

32.4
5.8
1.8
0.8
1.1

2.5
1.2
0.9

2.9
1.5
0.5

3.2
1.4
0.5

3.2
1.4
0.5

0.9

0.5

0.5

0.5

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

FY15

FY16

FY17E

FY18E

3,597.8
19,429.5
1.9
23,029.2
26,859.1
1,901.5
963.3
52,753.1

3,600.5
22,165.1
1.9
25,767.5
38,214.1
3,071.4
3,274.0
70,327.0

3,600.5
22,945.3
1.9
26,547.7
37,364.1
3,071.4
3,274.0
70,257.1

3,600.5
23,707.6
1.9
27,310.0
37,864.1
3,071.4
3,274.0
71,519.5

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

62,461.0
26,927.4
35,533.6
5,140.5
40,674.1
11,532.8
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

101,870.0
33,578.2
68,291.8
6,098.6
74,390.4
1,378.9
106.5
1,177.6
4,784.8
2.0
781.9
6,852.8
11,248.1
1,075.1
12,323.1
-5,470.4

107,468.6
41,058.6
66,410.0
8,500.0
74,910.0
1,378.9
110.2
1,218.0
4,949.1
2.1
407.1
6,686.4
11,634.2
1,112.0
12,746.1
-6,059.8

115,468.6
48,477.8
66,990.8
8,500.0
75,490.8
2,378.9
110.9
1,226.4
4,982.9
2.1
132.9
6,455.1
11,713.8
1,119.6
12,833.4
-6,378.2

Other Non Current Assets

Application of Funds

45.8

27.8

27.8

27.8

52,753.1

70,326.7

70,256.9

71,519.3

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

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

ICICIdirect.com coverage universe

Sector / Company
Bharti Airtel (BHATE)
Bharti Infratel (BHAINF)
Idea Cellular (IDECEL)
Tata Comm. (TATCOM)

CMP
M Cap
EPS (|)
(|)
TP(|) Rating
(| Cr) FY16 FY17E FY18E
311
315 Hold 124,259 13.7
12.4 14.8
344
450 Buy 65,199 11.8
14.4 15.3
84
80 Hold 30,117
8.6
2.4
2.6
511
543 Buy 14,568 -49.0
19.8 24.8

P/E (x)
EV/EBITDA (x)
RoCE (%)
RoE (%)
FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
22.7
25.0 21.1
6.2
5.9
5.5
9.4
9.9
10.1
6.1
7.8
8.2
29.0
23.8 22.4 11.4 10.5
9.6 15.6
17.1
19.4 12.3
15.3
16.5
9.8
34.8 32.4
5.2
5.7
5.8
9.4
6.6
6.4 12.0
3.3
3.4
NM
25.8 20.6
9.0
7.4
6.3
5.1
8.7
10.5
NA
NA 138.3

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com 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

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 8

ANALYST CERTIFICATION
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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
report.

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