INDUSTOWER — earnings call
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Prepared remarks
CONFERENCE CALL PARTICIPANTS · Mr. Sohan Joshi
Mr. Sohan Joshi
Individual Investor/Mumbai · Mr. Arun Prasath
Mr. Arun Prasath
Avendus Spark/Chennai · Mr. Sanjesh Jain
Mr. Sanjesh Jain
ICICI Securities/Mumbai · Mr. Pradyumna Choudhary
Mr. Pradyumna Choudhary
JM Financial/Mumbai · Mr. Nikhil Pradip Deshpande
Mr. Nikhil Pradip Deshpande
Axis Bank/Mumbai · Mr. Aditya Suresh
Mr. Aditya Suresh
Macquarie/Mumbai · Mr. Angad Katdare
Mr. Angad Katdare
Sameeksha Capital/Mumbai · Ms. Saloni Shah
Ms. Saloni Shah
Sohum Asset Managers/Mumbai · Mr. Raunak Himmatramka
Mr. Raunak Himmatramka
Robocapital/Mumbai · PRESENTATION
PRESENTATION
Vandana – Moderator · Good afternoon, ladies and gentlemen. I am Vandana, the moderator for this conference. Welcome to the Indus Towers Limited Third
Good afternoon, ladies and gentlemen.
I am Vandana, the moderator for this conference.
Welcome to the Indus Towers Limited Third Quarter ended December 31, 2023, Earnings Call.
For the duration of the presentation all participant lines will be in the listen-only mode.
After the presentation the question-and-answer session will be conducted for all the participants on this call.
In case of a natural disaster the conference call will be terminated post an announcement.
Present with us on the call today is the senior leadership team of Indus Towers.
Before I hand over the call, I must remind you that the overview and discussions today may include certain forward- looking statements that must be viewed in conjunction with the risks that we face.
I will now hand over the call to our first speaker of the day, Mr. Prachur Shah.
Thank you and over to you Mr. Sah!
Mr. Prachur Sah – MD & CEO- Indus Towers Limited Thank you Vandana and a very warm welcome to all participants.
Joining me today are my colleagues, Mr. Vikas Poddar, CFO, Mr. Tejinder Kalra, COO and Mr. Dheeraj Agarwal, Head Investor Relations on the call.
I am pleased to present our business performance for the quarter ended December 31, 2023.
Thank you very much Mr. Joshi.
The next question comes from Mr. Arun Prasath from Avendus Spark/Chennai.
Mr Prasath you may ask your question now.
Mr. Arun Prasath - Avendus Spark/Chennai
Questions and answers
System · Call Header
Transcript of Indus Towers Limited Third Quarter Ended December 31, 2023 Earnings Conference Call Republished with permission.
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After adjusting for the impact, the energy margins are similar to Q2 FY2024. Q3 last year had benefits from reversal of certain provisions.
As touched upon by Prachur, we continue to work on reduction in our energy expenses.
Our reported profit after tax grew by 19% quarter-on-quarter to Rs.15.4 billion as against a loss of Rs.7.1 billion in the corresponding quarter of the previous year.
Q3 FY2023 PAT was impacted by the substantial provision for doubtful debts and an exceptional item relating to impairment of revenue equalization asset.
Please note that with regards to pending matters on entry tax before the courts, we have reassessed our contingent liabilities and based on the views emanating from various judicial bodies, we have provided for them in Q3 FY2024. Accordingly, there is an increase of Rs.1.3 billion in depreciation and Rs.
0.5 billion in interest cost.
In addition to the interest adjustment that I explained earlier overall finance income was also aided by cash interest collection on overdue from a major customer.
After normalizing the one-off impacts of provision for doubtful debts, entry tax and impairment of revenue equalization asset, our profit after tax increased by 4.6% year-on-year and 15.8% quarter-on-quarter.
The reported pretax return on capital employed and post-tax return on equity for the rolling 12 months were at 19.2% and 24.8% respectively.
In terms of the cash flows, free cash flow for the quarter was at Rs.8.7 billion despite capex remaining elevated at Rs.
26.5 billion.
As I had stated in the last earnings call, subsequent collection of delayed payment for Q2 from a major customer aided the free cash flow in this quarter.
The capex continues to be high on account of strong tower additions by one of our major customers.
We believe that these investments will aid business growth and help us generate long-term value for the shareholders.
Our trade receivables decreased by Rs.1.7 billion due to higher collections from one of our major customers.
The full impact of the higher collection is not reflecting due to some timing differences as Rs.3 billion was collected in January.
With regards to the past overdue, we remain in constant discussions with the customer for clearance of the same.
To sum it up, we are pleased to have delivered a robust operational and financial performance during the quarter.
In addition to the business growth, the financial performance was also aided by unwinding of the past dues.
The strong operational performance was underpinned by an accelerated rollout by one of our major customers in rural areas.
We expect its network expansion and 5G rollouts to continue to support our business growth in the near future.
I would now request the moderator to open the floor for questions and answers please.
Vandana – Moderator · Good afternoon, ladies and gentlemen. I am Vandana, the moderator for this conference. Welcome to the Indus Towers Limited Third
Thank you very much Sir.
We will now begin the question-and-answer interactive session for all the participants who are connected to the audio conference service from Airtel.
Due to time constraints, we would request if we could limit the number of questions to two to enable more participation.
Hence, management will take only two questions per participant to ensure maximum participation.
Participants who wish to ask questions may please press “*” and “1” on their touchtone enabled telephone keypad.
On pressing “*” and “1” participants will get a chance to present their questions on a first in line basis.
To ask a question participants may please press “*” and “1” now.
The first question comes from Mr. Sohan Joshi from Mumbai.
Mr. Joshi you may ask your question now.
Mr. Sohan Joshi – Individual Investor/Mumbai I want to ask what is the status of tower fiberization, have we achieved 100% coverage on tower fiberization?
Mr. Tejinder Kalra - COO – Indus Towers Limited So Mr Joshi the tower fiberization of course is being done by the operators as of now as per the data available from various sources.
Typically, the Indian tower fiberization for most of the customers is in the vicinity of about 30% to 35% so there is still a long way to go for tower fiberization, barring one of the operators which has recently, in the last few years, launched the services.
The fiberization is at a little higher level but overall there is still quite a gap.
Mr. Sohan Joshi – Individual Investor/Mumbai So by what duration are we expecting to cover a larger part of the coverage for the fiberization maybe within two to three years?
Mr. Tejinder Kalra - COO – Indus Towers Limited