Bharti Airtel shares: Should you buy the telecom stock as Q3 profit rises 92%?
Telecom operator Bharti Airtel Ltd reported an about 92% year-on-year (YoY) rise in consolidated net profit at ₹1,588 crore for the three months ended December 2022, helped by competitive growth across businesses. Its total revenue rose nearly 20% to ₹35,804 crore.
“Premiumisation-led upgrades and stellar execution led Airtel to maintain its industry-leading YoY revenue/EBITDA growth of 20%/26%. Revenue/EBITDA came in line with our estimates, but PAT undershot expectations due to oneoff provisions,” brokerage Ambit Capital said.
Airtel is making 5G investments in the hopes of getting more high-value consumers. It is also expanding its 4G network to match Jio’s population coverage.
“Non-mobile businesses’ growth remained healthy (16% YoY). B2B revenue growth remained healthy. Airtel capitalised on increased demand for data leverage on adoption of new digital products launched in FY21. We will revise our estimates after the earnings call. We remain confident of the telecom industry taking tariff hikes in FY23-25E given current low returns of all industry participants. Airtel is best equipped to benefit from this and digitisation-led opportunities in mobile and non-mobile segments,” the brokerage added.
Ambit believes that Airtel’s results are in continuation with past trends and are unlikely to lead to any change in investors’ view of the company. It has Buy rating on Bharti Airtel shares with a target price of ₹950 apiece.
“We are believers in the company’s ability to hike prices at 12% CAGR over FY22-25E as current tariffs remain affordable. Airtel trades at 8.2x and 26x FY24E EV/EBITDA and P/E, a premium compared to regional competitors, which, in our opinion, is justified given its superior growth trajectory and strong balance sheet,” the brokerage added.
India Mobile average revenue per user (ARPU) increased to ₹193 during the reporting quarter from ₹163 in December 2021 quarter, according to the company. Bharti Airtel Managing Director Gopal Vittal said that the company delivered another quarter of consistent and competitive growth across businesses.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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