Home Business Bharti Airtel’s Net Profit Jumps 466% in Q1; Should you Invest in the 5G-Ready Telecom Stock?

Bharti Airtel’s Net Profit Jumps 466% in Q1; Should you Invest in the 5G-Ready Telecom Stock?

Bharti Airtel’s Net Profit Jumps 466% in Q1; Should you Invest in the 5G-Ready Telecom Stock?


Airtel Shares Today: Shares of Bharti Airtel were trading higher in the early trade on Wednesday after the company reported its June quarter earnings. The telecom companies consolidated net profit jumped over 5.6 times year-on-year (YoY) to Rs 1,607 crore in the first quarter of FY23, led by strong revenue growth and 4G customer addition. Airtel’s consolidated revenue from operations during the quarter under review rose 22.2 per cent YoY to Rs 32,805 crore; its average revenue per user (ARPU) grew 2.8 per cent sequentially and by over 25.3 per cent YoY to Rs 183. Revenue growth got a boost from the 20 per cent hike tariff hike by telecom companies last November.

Airtel continued to gain market share in the 4G segment and the company added 4.5 million 4G customers in the June quarter. Its total number of 4G customers now stands at over 205 million and they account for 63 per cent of its customer base. The average data usage per customer per month rose to 19.5 GB, against 18.8 GB in the quarter ended March 31, 2022.

“We continue to deliver strong and sustained growth. The Ebitda margin is now at 50.6 per cent. Our enterprise and home businesses now have strong momentum and delivered strong double-digit growth, improving the diversity of the overall portfolio. Airtel’s strategy of winning with quality customers continues to yield good results with an industry-beating ARPU of Rs 183 crore,” Airtel’s MD and CEO Gopal Vittal said in a statement.

In the spectrum auction that concluded last week, Airtel purchased 19,867.8 MHz of spectrum across various bands.

Brokerage house Motilal Oswal said, “We expect better valuation multiple for the stock given: a) a consistent 20 per cent growth opportunity, b) low concern on 5G, and c) the company turning profitable with high 50 per cent 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 per cent FCF yield, and 25 per cent deleveraging augur well for the stock. Maintain Buy,” they added.

Kotak Institutional Equities in its note said that Bharti Airtel reported a strong operational print in 1QFY23; reported results were in line with their estimates reflecting a healthy performance across segments. “We reiterate buy rating on the stock with a revised fair value of Rs 830, expecting the company to benefit from—(1) an improvement in industry health underpinned by rising ARPUs, (2) improvement in subscriber mix, and (3) 5G rollout, which will propel Bharti’s several digital/enterprise initiatives,” they said.

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