Bharti Airtel reports 32.0% CAPEX growth in 2016 and 4.9% Revenue growth
27-04-2016 • About Bharti Airtel (
$BHARTIARTL) • By InTwits
Bharti Airtel reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 35.3% in FY2016 vs. 34.1% in FY2015 vs. 33.2% in FY2012
- Bharti Airtel has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.2%. At the same time it's a lot of higher than industry average of 14.0%.
- CAPEX is quite volatile: ₹39,891m in FY2016, ₹59,776m in FY2015, ₹94,236m in FY2014, ₹118,710m in FY2013, ₹125,119m in FY2012
- The company has highly profitable business model: ROIC is 12.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.8x while industry average is 2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 4.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.3 pp from 26.7% to 32.0% in FY2016. During the last 5 years EBITDA Margin bottomed in FY2013 at 30.2% and was growing since that time.
SG&A as a % of Revenue showed almost no change in FY2016. During FY2012-FY2016 SG&A as a % of Revenue topped in FY2013 at 18.8% and was declining since that time.
Net Income margin showed almost no change in FY2016. During FY2012-FY2016 Net Income margin bottomed in FY2013 at 3.0% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 20.0% in FY2016. The company showed CAPEX/Revenue growth of 3.7 pp from 16.3% in FY2013 to 20.0% in FY2016. For the last three years the average CAPEX/Revenue was 16.4%. Bharti Airtel invested a large share of EBITDA (56.7%) to CAPEX. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 13.3% and was growing since that time.
Return on investment
The company operates at good ROIC (12.4%) while ROE is low (8.6%). ROIC increased slightly on 0.68 pp from 11.7% to 12.4% in FY2016. ROE showed almost no change in FY2016. During the last 5 years ROIC bottomed in FY2013 at 7.0% and was growing since that time. During the last 5 years ROE bottomed in FY2013 at 4.5% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 1.9x. Net Debt / EBITDA dropped on 0.2x from 2.1x to 1.8x in FY2016. Debt showed almost no change in FY2016 while cash surged on 216%. Net Debt/EBITDA declined at -0.3x per annum in FY2012-FY2016.
Bharti Airtel has short term refinancing risk: cash is only 45.4% of short term debt.
Management team
Bharti Airtel's CFO is Nilanjan Roy. Nilanjan Roy has 5 years tenure at the company.
Financial and operational results
Bharti Airtel ($BHARTIARTL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 714,508 | 769,045 | 857,461 | 920,394 | 965,321 | 4.9% |
| SG&A | 126,310 | 144,632 | 147,979 | 155,533 | 158,896 | 2.2% |
| EBITDA | 237,123 | 232,579 | 277,770 | 313,883 | 340,933 | 8.6% |
| Net Income | 42,594 | 22,757 | 27,727 | 51,835 | 54,842 | 5.8% |
Balance Sheet
|
|---|
| Cash | 20,300 | 16,078 | 49,808 | 11,719 | 37,087 | 216.5% |
| Short Term Debt | 193,078 | 98,226 | 209,039 | 211,389 | 81,665 | -61.4% |
| Long Term Debt | 497,154 | 569,137 | 549,919 | 452,283 | 580,466 | 28.3% |
Cash flow
|
|---|
| Capex | 144,436 | 125,722 | 114,159 | 146,411 | 193,313 | 32.0% |
Ratios
|
|---|
| Revenue growth | 20.0% | 7.6% | 11.5% | 7.3% | 4.9% | |
| EBITDA growth | 18.1% | -1.9% | 19.4% | 13.0% | 8.6% | |
|
|---|
| EBITDA Margin | 33.2% | 30.2% | 32.4% | 34.1% | 35.3% | 1.2% |
| SG&A, % of revenue | 17.7% | 18.8% | 17.3% | 16.9% | 16.5% | -0.4% |
| Net Income Margin | 6.0% | 3.0% | 3.2% | 5.6% | 5.7% | 0.0% |
| CAPEX, % of revenue | 20.2% | 16.3% | 13.3% | 15.9% | 20.0% | 4.1% |
|
|---|
| ROIC | 8.9% | 7.0% | 9.4% | 11.7% | 12.4% | 0.7% |
| ROE | 8.6% | 4.5% | 5.0% | 8.5% | 8.6% | 0.1% |
| Net Debt/EBITDA | 2.8x | 2.8x | 2.6x | 2.1x | 1.8x | -0.2x |
Peers in Telecom Services
Below we provide Bharti Airtel benchmarking against other companies in Telecom Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 26.2% | 15.0% | 18.0% | 19.3% | - |
| Mahanagar Telephone Nigam ($MTNL) | -8.1% | 1.6% | -0.6% | 0.5% | - |
| |
|---|
| Median (2 companies) | 9.1% | 8.3% | 8.7% | 9.9% | - |
|---|
| Bharti Airtel ($BHARTIARTL) | - | 7.6% | 11.5% | 7.3% | 4.9% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 26.1% | 26.8% | 31.5% | 34.4% | - |
| Mahanagar Telephone Nigam ($MTNL) | -52.0% | -82.7% | -25.1% | -18.5% | - |
| |
|---|
| Median (2 companies) | -12.9% | -28.0% | 3.2% | 7.9% | - |
|---|
| Bharti Airtel ($BHARTIARTL) | 33.2% | 30.2% | 32.4% | 34.1% | 35.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 24.3% | 15.6% | 14.0% | 13.4% | - |
| Mahanagar Telephone Nigam ($MTNL) | 21.9% | 21.1% | 5.7% | 8.5% | - |
| |
|---|
| Median (2 companies) | 23.1% | 18.3% | 9.8% | 11.0% | - |
|---|
| Bharti Airtel ($BHARTIARTL) | 20.2% | 16.3% | 13.3% | 15.9% | 20.0% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 8.1% | 8.8% | 11.0% | 12.1% | - |
| Mahanagar Telephone Nigam ($MTNL) | -24.0% | -39.1% | -14.0% | -9.3% | - |
| |
|---|
| Median (2 companies) | -8.0% | -15.2% | -1.5% | 1.4% | - |
|---|
| Bharti Airtel ($BHARTIARTL) | 8.9% | 7.0% | 9.4% | 11.7% | 12.4% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 2.6x | 2.3x | 2.5x | 2.3x | - |
| |
|---|
| Median (1 company) | 2.6x | 2.3x | 2.5x | 2.3x | - |
|---|
| Bharti Airtel ($BHARTIARTL) | 2.8x | 2.8x | 2.6x | 2.1x | 1.8x |
