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CLSA downgrades Bharti Infratel to 'sell'

The brokerage has cut its FY20-FY21 tenancy estimates by 2 per cent

ETMarkets.com|
Apr 25, 2019, 10.58 AM IST
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CLSA said Bharti Infratel’s upcoming merger with Indus Towers will not improve its capital structure and could result in a stock overhang.
MUMBAI: CLSA downgraded Bharti Infratel to sell from outperform and lowered its price target to Rs 285 from Rs 300, citing muted tenancy growth outlook.

"With Vodafone Idea looking to optimise its network operating costs and the continuing slowdown in new tenancies by Reliance Jio, the tenancy growth outlook for Bharti Infratel is likely to be muted in the near term," said CLSA.

The brokerage has cut its FY20-FY21 tenancy estimates by 2 per cent and expects tenancies to see a 2.5 per cent compounded growth over FY19-FY21.

CLSA said Bharti Infratel’s upcoming merger with Indus Towers will not improve its capital structure and could result in a stock overhang as both Bharti Airtel and Vodafone Idea may look to sell their stakes in the merged company to deleverage their balance sheets.

The brokerage added that Bharti Infratel’s 4 per cent yield is a key support and special payouts or buybacks could be catalysts.

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