IIFL sets Rs 184 as target price for Bharti Infratel

IIFL has initiated coverage on Bharti Infratel ( BIL) and set target price of Rs 184.

BIL has contractually determinate revenue and almost exclusive relationships with the top three telcos in India, making for good cash-flow visibility.

"However, reasons such as low annual rental escalation of 2.5% (compared with positive real escalator in the US market), modest rental upsides from the data opportunity in India, competing tower companies having spare capacity and high valuations (1.8x FY14 P/B; 6% ROE) with respect to India utilities and US tower companies make us cautious," said IIFL in a report.

"We project rental revenue based on equalisation accounting as a result of which DCF-based target price falls 10% to Rs 184," report added.