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Motilal Oswal Report
Bharti Airtel Ltd. reported a moderate growth in Q2 FY24, with India Mobile Ebitda up 3% QoQ on a 1.5% average revenue per user increase. Consolidated Ebitda was flat QoQ, mainly due to the Naira devaluation.
Capex declined in Q2 after increasing consistently (India capex at Rs 57 billion versus Rs 105 billion in Q1). As a result, free cash flow rose to Rs 54 billion versus Rs 35 billion in Q1, enabling a deleveraging of Rs 14 billion.
In the near term, Bharti Airtel could see soft earnings growth and subdued FCF growth due to a limited potential for a tariff hike, market share gains and 4G-led mix benefits, along with high capex, including upcoming spectrum renewal.
However, over the next two-three years, Bharti Airtel is well poised to gain from sector consolidation and tariff hikes. Retain 'Buy' on the stock.
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