Bharti Infratel IPO is expensive, say Brokers

Business

oi-Sunil

By Sunil Fernandes

Published: Tuesday, December 11, 2012, 10:08 [IST]

Bharti Infratel, whose IPO is set to open today and close on December 14, is expensive say some brokerage firms. The company is offering shares in price band of Rs 210 - 240 rupees/share.
Angel broking in a report says that the Indian telecommunications industry may face policy changes in response to recent industry developments. "We believe such adverse industry conditions and increased cost pressure on customers may result in Bharti Infratel having to reduce rents or in co-location exits in excess of those permitted under the MSAs affecting profitability of the company going forward," Angel Broking said in its report.

Ambit, has asked investor to 'avoid' as valuations looks expensive, given growth opportunities

"Bharti Infratel (BIL) is likely to list at 10-12x FY14 EV/EBITDA and 38-44x FY14 P/E. These valuations appear expensive given the company's poorer economics compared to global tower companies and given the lack of short-term growth opportunities for BIL," the research firm has stated.

According to Religare Institutional Research, valuations at higher end of IPO band are not cheap given near-term growth outlook. "A key risk is a potential leveraging of the balance sheet to expand inorganically internationally. Advises investors to apply at mid-lower end of price band," the firm has stated.

Bharti Infratel, is the tower arm of country's largest telecom operator Bharti Airtel , is set to open for subscription on Tuesday, December 11. The company's has an IPO size of 18.89 crore shares and intends to raise around Rs 3,967-4,534 crore through the issue at a price band of Rs 210-240 per share. A discount of Rs 10 to the final issue price will be offered to retail investors.

It would be interesting to watch the response to the IPO of the company, which may spark an interest in the IPO market.

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