IGI Logo

Lower VIL provision leads to an improvement in EBITDA (in line)

* Revenue grew 1% QoQ to INR72b (in line). This was led by 3% QoQ rental revenue growth to INR45b, while energy revenue declined 3% QoQ to INR27b.

* Rental revenue growth was led by an increase in the number of towers.

* The company added ~7.6k towers, and ~7.2k co-locations were added. This implied a reduction in the average sharing factor sequentially to 1.72x from 1.74x.

* The decline in energy revenue was due to the decrease in energy reimbursements per tower by 6% QoQ.

* EBITDA was up 5% QoQ to INR36b (in line) led by: a) a dip in power and fuel and b) a decrease in VIL provision to INR641m (from INR1.3b in 2QFY24).

* After adjusting for VIL provisions, the Adj. EBITDA rose 3% QoQ to INR36.5b, and the adjusted margin improved 80bp QoQ to 50.7%.

* Adj. rental EBITDA rose 3% QoQ to INR37.3b, while the margin contracted 20bp QoQ to 83.1% during the quarter.

* Adj. energy continued to report a loss of INR761m at the operating level vs. INR618m loss in 2QFY24.

* Higher finance income and controlled depreciation/interest cost led to a 19% QoQ increase in PAT to INR15.4b.

Balance sheet and cash flow analysis

* Debtors continued to report higher at INR60b (vs. INR62b in 2QFY24).

* Net Debt (excluding lease) declined INR8.6b to INR46b in 3QFY24.

* For 9MFY24, FCF turned negative to INR6b due to higher capex of INR61.5b.

* The company generated a 3.5% FCF yield in FY23.

VIL provision terms

* VIL indicated challenges in making the committed payments pertaining to the Dec’22 outstanding, which was expected to be paid between Jan’23 and Jul’23. During the quarter, the funding plan did not materialize for the company.

* However, VIL has been paying the monthly billing amount from Jan’23 onwards. The cumulative provision booking for VIL in the last seven quarters stand at INR57b.

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html

SEBI Registration number is INH000000412