Reliance Infratel is coming out with issue of nearly 9 crore shares, the second IPO from the ADAG Group. The company is basically into passive infrastructure in the telecom space. The issue size is around 8.9 crore shares which constitutes only 10% of the post issued equity. It has part payment option for retailers and HNI as was the case in Reliance Power IPO as well. But if you look at the business of this company, it plans to have roughly around 36,849 towers by the end of March 2008. It currently owns nearly 23400 towers as of now, so the remaining ones are in the process of being built and is expected to be completed by March 2008.
Currently these towers are operating at nearly 1/3rd occupancy because the anchored tenant in these towers is Reliance Communications and its subsidiaries. Comparing it with its other competitors, like Indus towers which is a joint venture between Bharti, Vodafone and Idea where they have nearly 70,000 towers to begin with and their occupancy rate is likely to be much higher going forward for them as well. 42% of these towers are situated in metros, and in A cities, and the remaining are in B and C cities.
The company has a firm roll out order of 16,000 towers for which it’s going to come to the market and these have to be delivered by March 2009 at an estimated cost of Rs 4,623 crore. So we expect this IPO to be in the range of Rs 5,000 to Rs 5,500 crore which gives the valuation of USD 12.5 to USD 13.7 billion. Just 6-8 months back, they made a private placement of 5% to various investors, that came into a valuation of nearly USD 6.75 billion and it was done at a price of Rs 334. So based on the current capital that it wants to raise, we are looking at a price range of Rs 550 to Rs 610 for this IPO which is much higher.
As per the financials, it has Rs 900 crore for the 9-month period of FY08 and Rs 150 crore in bottom line, so by the end of FY 08, revenues of Rs 12,000 crore and nearly Rs 200 crore worth of profit can be expected for the company.
Source: Moneycontrol.com
Tuesday, February 5, 2008
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