Bharti Infratel Limited IPO Review (Avoid)

Review By Dilip Davda on Dec 3, 2012

Bharti Infratel LogoBharti Infratel, (BIL) a telecom tower venture of Bharti group is having second issue from their stable after a gap of decade plus. The company is engaged in telecom tower infrastructure providing business. It deploys, owns and manages towers and communication structures for all wireless operators. 

The business of Bharti Infratel and Indus is to acquire, build, own and operate tower and related infrastructure. Bharti Infratel and Indus currently provide access to their towers primarily to wireless telecommunications service providers. Bharti Infratel's and Indus's three largest customers are Bharti Airtel (together with Bharti Hexacom), Vodafone India and Idea Cellular. They are the three leading wireless telecommunications service providers in India by wireless revenue. In India, Infratel has over 34,000+ towers, across 18 states, and 11 Telecom circles, and still growing. Bharti Infratel also has a 42% stake in Indus Towers which was created as a Joint Venture between Bharti Infratel, Vodafone and Aditya Birla Telecom to hive off the Towers business in 15 telecom circles.

BIL mulls installation of 4813 towers, upgrading and replacing existing towers, green initiatives at tower sites along with generation corpus funds. To part finance, it is planning a book building route IPO for 188,900,000 equity shares of a Rs. 10 each within a price band of Rs. 210-240. With this float, the company is looking at a corpus of Rs. 3966.90 crore to Rs. 4533.60 crore based on lower or higher price band. It is offering a discount of Rs. 10 per share to retail investors and many banks and NBFCs have come forward to finance this IPO. This IPO is consisting of a fresh issue of 146234112 equity shares and an offer for sale of 42665888 equity shares by existing stakeholders. Issue opens for subscription on 11.12.12 and will close on 13.12.12 for QIBs and on 14.12.12 for all other categories. Post allotment the shares will be listed on BSE and NSE. Minimum application is to be made for 50 shares and in multiples thereof thereafter. The issue will constitute 10% of the post issue paid up equity capital of the company.

CRISIL has rated this IPO as IPO Grade 4 indicating "above average fundamentals" of the company. Karvy Computershare is the registrar of the issue and there is a band of 13 BRLMs for this IPO. Surprisingly, during road show, none of them shared the dais with the promoters.

As far as BRLM's mandate performances are concerned, first figure is for total mandate and in bracket is for failure to give listing gains. They are Bofa Merrill - 12 (4),, j.p. Morgan - 10 (2), Stan Chart Secur - NA, UBS Securities - 10 (3), Barclays Securities -NA, Deutsche Equities - 7 (2), Enam Securities - 44 (15), HSBC Securities - 4 (1), Kotak Mahindra Cap - 46 (13), BNP Paribas - NA, DBS Bank - NA, HDFC Bank - 1 (0) and ICICI Securities (25 (11).


Conclusion / Investment Strategy

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.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 3, 2012

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Bharti Infratel IPO FAQs

  1. 1. Why Bharti Infratel IPO?

    The initial public offer (IPO) of Bharti Infratel Limited offers an early investment opportunity in Bharti Infratel Limited. A stock market investor can buy Bharti Infratel IPO shares by applying in IPO before Bharti Infratel Limited shares get listed at the stock exchanges. An investor could invest in Bharti Infratel IPO for short term listing gain or a long term.

  2. 2. How is Bharti Infratel IPO?

    Read the Bharti Infratel IPO recommendations by the leading analyst and leading stock brokers.

    • Angel Broking - Avoid
    • CRISIL - Subscribe
    • Dilip Davda - Avoid
    • Emkay Global - Subscribe
    • KR Choksey Securities Ltd - Subscribe
    • Nirmal Bang - Subscribe
    • Prabhudas Lilladher Pvt Ltd - Subscribe
    • SPA Financial Advisor Ltd - Subscribe
    • VS Fernando - Apply at your own risk
  3. 3. Bharti Infratel IPO what should investors do?

    Bharti Infratel IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Bharti Infratel IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Bharti Infratel IPO good?

    Our recommendation for Bharti Infratel IPO is to avoid.

  5. 5. Is Bharti Infratel IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Bharti Infratel IPO.

  6. 6. When will Bharti Infratel IPO allotment status?

    The Bharti Infratel IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Bharti Infratel IPO allotment status to check.

  7. 7. When will Bharti Infratel IPO list?

    The Bharti Infratel IPO will list on Friday, December 28, 2012, at BSE, NSE.








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