Crisil upgrades Airtel’s long-term rating to AA+; outlook stable

Ratings agency Crisil has upgraded Bharti Airtel Ltd’s long term rating to AA+, with business outlook being stable, citing continued improvement in the company’s operating metrics.

The ratings agency, which has also reaffirmed Airtel’s short-term rating, said it expects further improvement in the overall credit risk profile of the company over the near to medium term on the back of improving cash accruals, deleveraging plans including rights issue.

“This is notwithstanding adjusted gross revenue (AGR) dues and additional expenditure done for acquiring spectrum at the auction held in March 2021,” it said.

On Tuesday, Bharti Airtel’s scrip fell 3.70% to settle at ₹695,85 on NSE.

Airtel’s stock has so far gained over 40% since the start of 2021 against a 15% fall in the Vodafone Idea’s scrip and a 20% rally in RIL stock.

Terming the outlook to be stable, Crisil said the business risk profile of Airtel will continue to benefit from its presence in diversified businesses and a healthy market position in the mobility business in India, while the financial risk profile will benefit from the rights issues and the expected increase in cash accrual.

Crisil said the ratings continue to reflect Airtel’s strong market position and improving operating performance of the domestic mobile and non-mobile segment, diversification across businesses, healthy operations in Africa, improving debt protection metrics and high financial flexibility.

“These strengths are partially offset by the company’s exposure to regulatory and technological risks.”

The ratings agency expects the ARPUs to improve, aided by recent revisions in some plans and up-trading by subscribers, resulting in further improvement in operating revenue and profit. It also believes that a broad based tariff hike as was last seen in December 2019, is likely within next 6-9 months. Livemint