Bharti Airtel Limited
Q2 FY 2012 ENDING SEP,2011
proportionate revenue
Rs. 172,698 million (ended September 30, 2011-Audited)
Rs. 152,310 million ( ended September 30, 2010-Audited)
proportionate EBITDA
Rs. 58,151million ( ended September 30, 2011 - Audited)
Rs. 51,377 million ( ended September 30, 2010- Audited)
As per IFRS Accounts (Consolidated)
BHARTI
AIRTEL is arguably the MOST EFFICIENT TELECOM COMPANY in India. Its YOY
progress was always very impressive. If India progressed in the Telecom sector
so fast – apart from regulatory and governmental actions – the entrepreneurial
zeal of Sunil Bharti Mittal and others is a
great contributory factor.
But,
as the Nation knows by now – the supportive governmental actions became a little non-transparent and illogical in recent past – leading to the
present condition where making profits in Telecom sector is becoming
progressively difficult.
In
this context, we need to view the results of Bharti Airtel for the second
quarter ending Sep,2011.
STAND
ALONE RESULTS
Net
Sales for
Q2 FY 12 stands at Rs.10164.50 cr – down by -0.15% from Q1 FY 12; up by 3.42%
from Q4 FY 11; up by 6.28% from Q3 FY 11; and up by 9.3% from Q2 FY 11.
Total
Expenditure for Q2 FY 12 stands at Rs.7999.70 cr – down by -1.92% from Q1 FY 12; up by 3.93%
from Q4 FY 11; up by 6.9% from Q3 FY 11; and up by 13.19% from Q2 FY 11.
Increase in expenditure is slightly more than proportionate compared to sales
Revenue.
Profit
from Operations for
Q2 FY 12 stands at Rs.2164.80 cr – up by 6.95% from Q1 FY 12; up by 1.58% from
Q4 FY 11; up by 4.06% from Q3 FY 11; but DOWN BY -3.02% from Q2 FY 11.
Interest
costs have
gone up to Rs.594.60 cr from Rs. 203.30 cr
in Q1 FY 12;(Up by 192.5%); Rs.76.50 in Q4 FY 11 (Up by 677.25%); Rs. 55.70 cr in Q3 FY 11 (Up by 967.5%) and
up from Rs.(-)146 cr in Q2 FY 11.
Profit before tax stands at Rs.1583.20 cr – down by -14% from Q1
FY 12; down by -23.99% from Q4 FY 11; down by -22.37% from Q3 FY 11; and down
by -34% from Q2 FY 11.
Net
Profit stands
at Rs.1307.50 cr – down by -8.71% from Q1 FY 12; down by -28.86% from Q4 FY 11;
down by -29.24% from Q3 FY 11; and down by -37.8% from Q2 FY 11.
Basic
EPS on
a Face Value of Rs.5 stands at Rs. 3.44
in Q2 FY 12; Rs.3.77 in Q1 FY 12; Rs.4.84 in Q4 FY 11; Rs. 4.87 in Q3 FY 11; Rs.5.53 in Q2 FY 11. There is
difficulty in predicting the direction of movement of the profits and EPS for
next 2 quarters – even though Bharti may maintain upward movement in Sales.
This is due to the severe competitive conditions in Telecom sector and the
inability of players to increase tariffs on their own.
Annaulised
EPS may therefore be around Rs.14 for FY 2012.
Current Market price of
the share is Rs.344.95 52
week high price is Rs.447.85 and 52 week low price is Rs.304.45
The Price Earnings
Ratio stands at 24.64.
The performance
report of Bharti presents interesting facts.
The total customer
base as at Sep’11 is 236,986,000. This has been showing consistent upward
trend.
Total minutes on
network was 250,446 MLN MINs as at Sep,11 – whereas the same was 251,962 as of
June’11, indicating a fall in it.
No.of countries of
operation in 2009 was 2, in 2010, it was 3, and now, it is 19 countries. This
shows the urgency with which Bharti is spanning out – out of India.
CONSOLIDATED FINANCIALS (Rs
in Millions) :
Total Revenue was Rs.152,311(Sep,10); Rs.169,749(June,11); and Rs.172,698(Sep,11).
Cash Profit from
operations after Exchange Rate fluctuations
is
: Rs.48,058 (Sep,10); Rs.48,508(June’11) and Rs.46,966 (Sep,11).
Net Income is Rs.16,612 (Sep,10); Rs.12,152
(June,11); Rs.10,270 (Sep,11)
EBITDA MARGIN is 33.7%.
Net Profit Margin is 5.9% in Sep,11(falling from 10.9% in
Sep,10)
Return on shareholders’
equity has
fallen from 18.5% insep’10 to 10.3% in Sep,11
ROCE
has fallen from 13.9% to 7.9%
Average Revenue per user
in India (for
Mobile services) has fallen to Rs.183 from Rs.202 in the above period.
COMMENTS :
If you are an Entrepreneur, where would you invest your money – will it be
where the Net Profit Margin is 6% or
where it is 11% ? Will it be where ROCE is less than 8% or where it is more
than 14%?
This seems to explain
why Efficient entrepreneurs of India are choosing foreign destinations now.
Investments in
Telecom sector are not taking place in India now – at the speed required. If
India is a better destination than Africa – would Bharti choose Africa?
Unfortunately, the
changing trends in telecom sector are still not getting adequate attention of
either the Government or the Regulator (TRAI).
Two operators - MTNL
and BSNL - have slipped into RED already. Both are Central PSUs where Government’s
own investment runs into lakhs of Crores. Government does not seem to have
applied its mind adequately on what to do with that Investment. There are also several
lakhs of Jobs at stake.
Admittedly, they may come under the category of least efficient operators, though that may not necessarily be the case. There are compelling reasons for them to undertake inefficient , less profitable operations and that also makes them less profitable. Plus, historic, low tech, low skill operations also need to be considered.
Admittedly, they may come under the category of least efficient operators, though that may not necessarily be the case. There are compelling reasons for them to undertake inefficient , less profitable operations and that also makes them less profitable. Plus, historic, low tech, low skill operations also need to be considered.
But then, Government
needs to protect its babies. TRAI, under its charter, also has a duty – to FIX
LOWER BAND OF TARIFFS – below which operators cannot go. But, this has never
been done, on the ostensible reason that customers benefit by lower tariffs.
This may be. But, below a certain level of profitability, even the most
efficient operators would not want to put their moneys in India. That seems to
be happening now.
It is high time that TRAI FIXES LOWER BAND OF TARIFFS for
various services so that the 2 central PSUs also survive – and the most
efficient ones have incentive to Invest in India further in Telecom sector.
Government also needs
to cancel the LICENCES UNUTILISED / UNDERUTILISED SO FAR. Granting hundreds of Licenses
was done – as though India’s market is bigger than world Market itself. This
was perhaps the Biggest mistake and all these additional licences need to be
cancelled forthwith.
If these Governmental
and Regulatory actions are forthcoming, Telecom sector in India will grow as
ever – and Bharti will be a Great Investment Bet.
Else, we may have to invest -with confidence in Sunil Mittal's ability for making his foreign operations highly profitable.
Else, we may have to invest -with confidence in Sunil Mittal's ability for making his foreign operations highly profitable.
RESULTS TABLE – STAND ALONE
BHARTI
AIRTEL
|
30-Sep-11
|
30-Jun-11
|
31-Mar-11
|
31-Dec-10
|
30-Sep-10
|
Net Sales
|
1016450
|
1018000
|
982850
|
956370
|
929990
|
Other Expenditure
|
648210
|
659820
|
611840
|
599550
|
561560
|
Total Expenditure
|
799970
|
815590
|
769730
|
748340
|
706770
|
Profit
from Operations
|
216480
|
202410
|
213120
|
208030
|
223220
|
Other Income
|
1300
|
1900
|
2810
|
1490
|
1990
|
Interest
|
59460
|
20330
|
7650
|
5570
|
-14600
|
Profit before tax
|
158320
|
183980
|
208280
|
203950
|
239810
|
Tax expense
|
27570
|
40750
|
24490
|
19170
|
29780
|
Net Profit after tax
|
130750
|
143230
|
183790
|
184780
|
210030
|
Net Profit
|
130750
|
143230
|
183790
|
184780
|
210030
|
Face Value (In Rs
|
5
|
5
|
5
|
5
|
5
|
Paid Up Equity
|
189880
|
189880
|
189880
|
189880
|
189880
|
Reserves
|
4496850
|
4365760
|
4221070
|
4079010
|
3892160
|
Basic EPS
|
3.44
|
3.77
|
4.84
|
4.87
|
5.53
|
Public holding (%)
|
31.67
|
31.71
|
31.71
|
31.8
|
32.13
|
* *
* E N D *
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