Bharti Airtel Q1 Review: Analysts Maintain 'Buy' After Revenue, Ebitda Beat Estimates

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.