Bharti Airtel Shares Decline After Q2 Profit Misses Estimates
Shares of Bharti Airtel Ltd. fell after its second-quarter profit came below the consensus estimate of analysts.
The Indian telecom operator's net profit rose 33% sequentially to Rs 2,145.2 crore for the quarter ended September 2022, according to its exchange filing. That compares with the Rs 2,327.4-crore consensus estimate of analysts tracked by Bloomberg.
Bharti Airtel Q2 Results FY23 (Consolidated QoQ)
Revenue up 5% at Rs 34,526.8 crore
Ebitda up 7% at Rs 17,721.2 crore
Ebitda margin at 51.3% vs 50.6%
Morgan Stanley sees Airtel's India Ebitda miss and weaker-than-expected cash flow generation as the key misses in the quarter. While Jefferies downgraded Airtel's ratings to 'hold' saying the current stock price has already priced in the strong growth outlook.
However, majority of the analysts' sentiments were positive after the telecom operator reported strong revenue growth in the second quarter. Nomura said Bharti Airtel's overall revenues remained higher than those reported by Reliance Jio Infocomm Ltd. in July-September, while Ebitda remained 5% higher.
Shares of Bharti Airtel fell 1.83% to Rs 431.85 apiece as of 9:40 am, while the benchmark Nifty 50 gained 0.59% on the NSE.
Here's what brokerages made of Bharti Airtel's quarterly results:
Nomura
Maintains 'buy' with a target price of Rs 855, implying a potential upside of 2.8%.
Maintains a constructive stance on the company.
Expect the stock to benefit from the rising trend of ARPUs, tariff hikes, market share gains, improving cash flows, and 5G rollout.
Digital and enterprise initiatives in the 5G landscape will help shift from telecom company to tech company in the coming years.
CLSA
Retains 'buy' with a target price Rs 930, a potential 12% upside.
Favourable long-term risk reward.
Sees Bharti recording 22% India mobile Ebitda CAGR by FY25.
Second-quater performance leaves upside potential for India mobile Ebitda.
Strong Q2FY23 in India and Africa leaves upside potential to forecast 14/22% consolidated/India mobile Ebitda CAGR to FY25.
Sees hefty cashflows driving deleveraging to 1X Ebitda and pre-tax ROCE to 18% by FY25 despite 5G capex.
Jefferies
Downgrades rating to 'hold' from 'buy' with a target price of Rs 855, a 5% upside.
Jefferies says strong growth outlook priced in.
With two months left in Q3FY23 and upcoming state elections, tariff hikes may take place in Q4.
Believes network costs and SG&A costs likely to rise faster amid the 5G rollout.
Cuts India mobile estimates by 1-8%.
Cuts consolidated Ebitda estimates by 2-5% and profit estimates by 9-11%.
Higher or earlier-than-expected tariff hikes can drive positive surprises.
Morgan Stanley
Keeps 'overweight' rating with a price target of Rs 825, implying a potential downside of 1%.
Higher-than-expected market share gains, price hikes, and monetization opportunities from assets are risks to the upside.
Higher-than-expected capex, tariff hike delays, further investments, and elevated diesel price are risks to downside.
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