The stock is up 20% year-to-date (against 8% gains by the market). Nonetheless, we continue to see more upside given its structural growth appeal and strong cash flow outlook. We estimate another ~10,000 tenants pa in FY15-17f, which with flat rents and a 50 bps margin expansion leads to revenue, ebitda and NPAT growth of 6-10% over FY15-17f. On cash flows, we estimate a 20%+ CAGR to R3,000 crore by FY17f.
Bharati Infratel posted a good FY14, it added more than 10,000 tenants (1,300 towers) versus a run-rate of 7,000 in FY11-12, which highlights a pick-up in the momentum on the back of improved telcos market dynamics. It reported strong revenue, ebitda and net profit growth of 8%, 16% and 51%, respectively, with margins improving by 360 bps to 40.7%.
Revenue growth was at 2% q-o-q, but ebitda growth of 3% q-o-q was above our expectations. NPAT of R470 crore (+15% q-o-q) was 20% ahead of consensus. It added 555 towers to a total of 83,300 and 3,800 tenants to a total of 1.67 lakh. DPS of R4.4 is proposed, which implies a 2% yield.