Bharti Airtel beats profit estimates with 50% jump in net: What should you do with the stock?

Consolidated EBITDA was at Rs 18,807 crore during the quarter, up 18 percent on-year and 1 percent on-quarter.

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Bharti Airtel shares will remain in focus on May 17, a day after the company announced its March quarter earnings.

Bharti Airtel reported a 50 percent jump in consolidated net profit at Rs 3,006 crore for the quarter ended March 2023 from Rs 2,008 crore a year back. Sequentially, it was a surge of 89 percent.

Revenue from operations stood at Rs 36,009 crore, up 14 percent from Rs 31,500 crore reported a year ago. Revenue was up 1 percent sequentially, Bharti Airtel said in an exchange filing.

Although the company beat estimates at the profit level, it missed the topline expectations. Analysts expected a 15 percent on-year and 46 percent on-quarter growth in net profit with projected revenue growth of 16 percent YoY and 2 percent QoQ, as per a Moneycontrol poll.

Consolidated EBITDA was at Rs 18,807 crore during the quarter, up 18 percent on-year and 1 percent on-quarter. EBITDA margin for the quarter was at 52.2 percent, as against 50.8 percent in the corresponding quarter last year and 52.0 percent in the previous quarter.

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Here is what brokerages have to say about the stock after the March quarter earnings:

Morgan Stanley

The research firm has kept an ‘overweight’ rating on the stock with a target price of Rs 860 per share. The company recorded strong net additions in its 4G and postpaid subscriber base while lower subscriber churn sequentially.

The miss in a India mobile average revenue per user (ARPU) versus consensus estimates, which resulted in a miss in India’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) performance.

A higher-than-expected capex has led to lower free cash flow (FCF) and the company’s net debt was higher than estimated due to increased finance lease obligations.

JPMorgan

The brokerage house has assigned an ‘underweight’ rating and set a target price of Rs 700 per share. The Q4 was a miss on headline revenues, even the EBITDA was in line. India wireless revenue growth was soft led by subscribers as ARPU was flat.

The capex continues to rise for India. The higher 5G capex, lack of tariff hikes, and deflation in premium ARPU (average revenue per user) will drive down return on invested capital (ROIC).

UBS

The foreign broking house has kept an ‘overweight’ rating with a target price of Rs 995 per share. The fourth-quarter results were softer than expected as consolidated revenue was 3 percent below estimates.

The India mobile revenues were up, driven by flat average revenue per user (ARPU) figures. The consolidated EBITDA missed estimates by 4 percent with the EBITDA margin remaining almost flat on-quarter.

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