Bharti Infratel IPO Review & Recommendations

Bharti Infratel IPO Review by Dilip Davda (Avoid)

[Dilip Davda]  

On BIL's performance part, for last three fiscals it has posted an average EPS of Rs. 3.46. For H1 of current fiscal it has posted annualized EPS of Rs. 5.28 and its NAV stands at Rs. 82.10 (on consolidated basis).  These earnings give EPS of Rs. 4.89 on fully diluted equity. Thus the asking price is at a P/E of 43 to 49 on lower-upper price band and looks very aggressive. As per company, they have no listed peers to compare this. It has issued bonus shares in the ratio of 9999 for 1 in August 2008 and 2 for 1 in August 2012. Shares issued to private equity players at Rs. 788.56 in March 2010 got adjusted to Rs. 262.85 post bonus and thus they are exiting at a discount to their acquisition cost and are raising doubt on likely future of BIL.  Considering higher asking price, it is better to buy at discount post listing. Application in this IPO with loan fund is not at all advisable.