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Axis Securities Report
In Q2 FY24, Bharti Airtel Ltd. reported revenue of Rs 37,044 crore, down 1.1% QoQ but up 7.3% YoY, which stood below our expectations. This was mainly on account of the devaluation of Nigeria's Naira and other currencies during the period.
The company posted an operating profit of Rs 19,514 crore with operating margins growing by 40 basis points, largely led by larger 4G conversions and a better service mix. Its net profit for Q2 FY24 stood at Rs 2,960 crore, registering a growth of 38% QoQ.
Outlook
From a long-term perspective, we believe Bharti Airtel would continue to gain market share, backed by the highest penetrations, and with minimum Capex requirements.
With a stronger digital portfolio supported by rising per-user data, we are positive about the future growth of Airtel.
Valuation and recommendation
We maintain our 'Buy' rating on the stock given the company's superior margins, stronger subscriber growth, and higher 4G conversions. We value the stock at Rs 1,155/share based on SOTP valuation and the target price indicates a robust upside of 26% from the current market price.
Key risks to our estimates and target price
The cut-throat competition may reduce the market share, leading to reductions in the revenue growth momentum.
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