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Bharti Airtel Q1 Result: What should investors do?

Shares of Bharti Airtel gained marginally in the early trade on August 10 after company reported its June quarter earnings.

Bharti Airtel Ltd on August 8 reported a 467 percent year-on-year (YoY) jump in consolidated net profit at Rs 1,607 crore for the quarter ended June 30, 2022, aided by subscriber additions and a higher revenue per user. On a sequential basis, profit, however, was down 20 percent.

The telecom major’s consolidated revenue rose 22 percent YoY to Rs 32,805 crore. On a sequential basis, it was up 4 percent.

Year-on-year growth was aided by a healthy addition of subscribers as well as an improvement in average revenue per user (ARPU), a key measure of performance in the telecom industry, after a round of tariff hikes.

Here is what brokerages have to say about stock and the company post June quarter earnings

Foreign broking firm Jefferies has maintained buy call on the stock and raised the target price to Rs 875 from Rs 860 per share.
The revenue/EBITDA was largely in-line with estimates, while profit was missed the estimates due to higher forex losses & lower profit from associates.

The ARPU rose 3% QoQ, further rise will require tariff hikes.
Jefferies tweak FY23-25 revenue/EBITDA estimates by up to 1% and lower the profit estimates by 4-12% to factor in Q1 results. Over FY22-25, expect co to deliver 17%/22% CAGR in revenu/EBITDA, reported CNBC-TV18.

Airtel is well poised to clock strong growth over next few years given its strong traction in its digital offerings, higher adoption of its bundle services, market share gains in its enterprise services and strong execution in the non-wireless business.

We forecast the company’s EBITDA would report a 23% CAGR over FY2022-FY2024E on the back of strong revenue growth, potential tariff hike, steady increase in 4G subscribers, and a higher postpaid subscriber mix.

We continue to prefer Airtel, given improving 4G subscriber mix, astuteness in spectrum acquisition approach, healthy network capacity and strong free cash flow (FCF) generation. We maintain our Buy recommendation on the stock with a revised price target (PT) of Rs 850

Motilal Oswal
We expect better valuation multiple for the stock given: a) a consistent 20% growth opportunity, b) low concern on 5G, and c) the company turning profitable with high 50% plus growth due to operating leverage.

The Rs 160b uncalled Rights issue and Rs 52b investment by Google should offset Bharti’s investment in 5G over the next two years.

We see potential upsides for both India and Africa businesses aided by steady earnings growth. We value Bharti on FY24E, assigning 11x EV/EBITDA to the India Mobile business and 5x to the Africa business, and arriving at our SoTP based Target Price of Rs 910. The ensuing earnings growth, 5% FCF yield, and ~25% deleveraging augur well for the stock. Maintain Buy.

At 09:17 hrs Bharti Airtel was quoting at Rs 708.35, up Rs 4.00, or 0.57 percent on the BSE. Moneycontrol

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