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Result Flash- Indus Towers-MOFSL

Revenue was flat QoQ at INR68b (in line) in 4QFY23. Rental revenue grew 2% QoQ to INR43b, while Energy revenue declined 3% QoQ to INR25b.

  • EBITDA jumped 3x QoQ to INR34b due to the reduction in the booking of VIL provisions to INR434m (v/s INR23b in 3QFY23) and savings in power and fuel costs (% to sales) by 90bp
  • After adjusting VIL provisions, EBITDA was flat QoQ at INR35b (3% below our est.) and adjusted margin improved 30bp to 51.5%.
  • VIL provisions fell to INR434m in 4QFY23 from INR12.3b/INR17.7b/INR23b in 1Q/2Q/3QFY23. Cumulative provisions for FY23 were INR54.5b.
  • Adjusted rental EBITDA grew 1% QoQ to INR35b (adjusting VIL provisions) and margin decreased by 50bp QoQ to 83%. The company posted Energy EBITDA loss of INR566m v/s INR318m in 3QFY23.
  • The company reported PAT of INR14b in 4QFY23 (5% miss) and adjusted PAT (after adjusting VIL provision) of INR 14.4b (2% below our est.).
  • This is the first time the company has not declared a dividend (v/s INR20 /INR11 per share in FY21/22).
  • Account receivable declined by INR21.9b to INR48.7b. Subsequently, debtor days came down to 63 in FY23 (from 93 in FY22). This could be due to VIL provisions of INR53.3b in FY23. n CFO declined 13% YoY to INR79b in FY23 due to the amount blocked in working capital and a higher tax payment. Cash capex increased by 10% YoY to INR32b, which led to a 52% reduction in FCF post interest and lease liabilities payment to INR13b. The dividend payment led to negative cash generation in FY23.
  • This leads to a reduction in FCF yield to ~3.5% in FY23 from ~5% in FY22. n Gross/Net Debt (excluding lease) decreased by INR11.3b/INR7b QoQ to INR47.1b/INR44.1b. For FY23, net debt increased by INR15.6b.

Management commentary

  • The renewal of co-locations with major customers during the year has secured the business for the long run.
  • The rapid pace of 5G rollouts and new tower rollouts act as strong levers of growth.

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.
  • However, VIL has been paying the monthly billing amount from Jan’23 onward and hence Indus continues to recognize revenue related to VIL.

For report,

CT Bureau

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