Shares of Bharti Airtel Ltd. rose on Friday even as its first-quarter net profit missed analysts' estimates.
However, most analysts maintained a "buy" rating on the stock, citing improved subscriber addition and mix that helped first-quarter revenue and Ebitda beat analysts' estimates.
The telecom operator's profit fell 46% sequentially to Rs 1,612 crore in the April-June quarter, according to an exchange filing on Thursday. That compares with a Bloomberg consensus estimate of Rs 2,762.6 crore.
Bharti Airtel Q1 FY24 Highlights (QoQ)
Revenue rose 3.9% to Rs 37,440 crore. (Bloomberg estimate: Rs 36,968.9 crore).
Ebitda grew 4.8% to Rs 19,598.5 crore. (Bloomberg estimate: Rs 19,290.4 crore).
Margin at 52.35% vs. 51.92%
Shares of Airtel advanced as much as 1.38% to Rs 883.75 apiece intraday. The stock was trading 1.16% higher at Rs 881.80 per share, compared to a 0.63% gain in the benchmark NSE Nifty 50 as of 11:34 a.m. The stock has gained 9.67% year-to-date.
Of the 32 analysts tracking Airtel, 27 maintain 'buy', two suggest 'hold', and three recommend a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 6%.
Here's What Brokerages Say About Airtel Q1 Earnings
CLSA
CLSA retained a 'buy' rating on the stock with a target price of Rs 1,030, implying an upside return potential of 18%.
Airtel's consolidated revenue of Rs 37,440 crore, up 4% QoQ/14% YoY, was 3% above CLSA's estimate, led by India mobile.
However, the reported profit of Rs 1612 crore was below CLSA's estimate due to a large Rs 34020 crore exceptional FX loss due to naira devaluation in the Africa operations.
The company's mobile 4G-subscriber addition was strong at 5.6 million QoQ and 2.44 crore YoY to 23 crore.
New promotional offers by Reliance Jio could hinder Airtel's data revenue growth, although faster-than-expected consolidation could provide upside to our estimates.
In Africa, there are regulatory and political risks to Airtel's growth trajectory. Currency depreciation could pose a risk to earnings. A prolonged extension of Covid-19 or further waves could hinder subscriber additions, according to CLSA.
Jefferies
The research firm maintains a 'buy', with a target price of Rs 1,040, implying an upside return potential of 18%.
Airtel net subscriber additions were healthy at 32 lakh and the average revenue per user at Rs 200, up 3% QoQ was slightly ahead of estimates due to improving subscriber mix and full quarter benefit of increase in voice tariffs.
Rise in the ARPUs was the key driver for the 12% YoY growth in India Mobile revenues.
Indian non-mobile businesses had a strong quarter, with homes and enterprise segments growing by 16-25% YoY.
Airtel's capitalised capex in India mobile at Rs 7800 crore was the highest in a decade with the company investing in 5G.
Airtel's consolidated free-cash-flow stood at Rs 6300 crore despite Rs 10,400 crore of capex in Q1.
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