Airtel, which will be announcing its October-December quarter earnings on Monday, reported revenues of Rs 37,043.8 crore in the previous quarter.
The net profit for the said quarter is expected to be in the range of Rs 2,340 and 3,308.50 according to estimates by Axis Securities and Yes Securities who pegged QoQ profit after tax (PAT) growth at 11.8% and 13.7%, respectively. The average estimates of the two brokerages stand at 13%
Bharti Airtel shares ended at Rs 752.95 on the NSE on Friday, down by Rs 2.25 or 0.30%.
Here’s what brokerages recommended:
Axis Securities
Bharti Airtel is expected to report an 8.4% YoY growth in revenue for the December quarter at Rs 38,800 crore versus Rs 35,804 crore in the year ago period. On a QoQ basis, the company’s revenue is expected to go up by 4.7% versus revenue of Rs 37,044 crore in Q2FY24. The profit after tax (PAT) is expected to come down by 10.5% YoY to Rs 2,340 crore versus Rs 2,614 crore in Q3FY23. Sequentially it is expected to go up by 11.8% as against Rs 2,093 crore in Q2FY24.
QoQ improvement may be seen with an increase in India and Africa wireless revenue meanwhile, a strong service mix and an increase in the ARPU may aid the margins. Strong customer additions and conversion in 4G from 2G is expected during the said quarter.
Yes Securities
Yes sees the company’s net profit at Rs 2,600 crore for Q3FY24E restricted by 5G-related costs and forex losses in Africa. Consolidated revenue is likely to be up 0.9% QoQ to Rs 37,400 crore and EBITDA to likely rise 0.9% to Rs 19,700 crore. Company’s India EBITDA to grow 12.5% YoY to Rs 14,800. India revenue rose 1.7% QoQ and 10% YoY to Rs 27,600 crore led by the mobile segment (+2.1% QoQ/10.5% YoY) in Q3FY24E. India EBITDA is likely to grow 1.7% QoQ (+12.5% YoY) to Rs 14,800 crore, restricted by recognition of 5G-related costs.Yes estimates a 46.5% YoY jump in Q3FY24 PAT at Rs 3,308.5 crore. On the sequential basis there is likely to be a 13.7% uptick.
Bharti Africa’s USD revenue may fall 2% QoQ to $1,221 million and EBITDA may dip 2% QoQ to USD 599 million due to African
currencies devaluation.
Bharti’s ARPU to grow 1% QoQ in Q3FY24E to Rs 205 aided by premiumisation from 2G to 4G and strong add in postpaid accounts while effecting a price hike in minimum recharge plan, Yes added.
Prabhudas Lilladher
Bharti’s Q3FY24E consolidated revenue is expected to increase 2.3% QoQ to Rs 37,900 crore while its Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) is seen to grow sequentially by 2% to Rs 19,900 crore.
The adjusted PAT for the reporting quarter is pegged at Rs 15,467 crore versus 15,881 crore in Q3FY2023 which will be 2.6% lower.
Prabhudas has factored-in subscriber growth of 3.6 million for Q3 taking the tally to 346 million coupled with ARPU increase of 1.1% QoQ to Rs 205. The subscriber growth in Q2FY24 stood at Rs Q2FY24. Africa business is expected to see revenue growth of 4% QoQ, Prabhudas said factoring in a 4% QoQ growth rate for the enterprise business.
Home services will see revenue growth of 8.1% QoQ with margin expansion of 20bps QoQ. For DTH a muted growth of 0.7% QoQ is seen.
Bharti is also targeting Rs 50,000 crore market opportunity with its Enterprise offerings including CPaaS, cloud, cybersecurity and data centers as the company expects 80% of corporates will put up 5G within the next 3 years.
It has put the target price at Rs 1,088 while recommending an ‘Accumulate’ rating.
BNP Paribas
The consolidated revenue is seen at Rs 38,020.7 crore, up by 6.2% YoY and 2.6% QoQ.
BNP Paribas expects 3QFY24 to be a stable quarter with capex moderation to start from 2HFY24. With stable tariffs and lack of any meaningful response to the operator’s 5G offering, it expects Airtel to report 2-2.5% QoQ increase in revenue, which should be ahead of the industry growth rate.
On a YoY basis BNP expects 11% revenue growth for Airtel while the EBITDA margins are likely to remain stable. Airtel’s consolidated revenue growth is likely to be weak due to Naira depreciation. The brokerage assumed a higher ARPU for Airtel and raised its FY25/26 estimates by 3/4%.
BNP has lowered the weighted average cost of capital (WACC) assumptions and rolled forward its DCF based valuation for Airtel to arrive at a raised target price of Rs 1,265 from Rs 1,075 it estimated previously. It has maintained an Outperform stance on the counter.
JM Financial
Bharti is expected to report a consolidated EBITDA of 20,400 crore which will be 2.9% QoQ growth. The India wireless EBITDA is expected to grow 2.5% QoQ led by 6 million strong mobile broadband subscribers’ addition and 1.5% QoQ growth in ARPU to Rs 20,600 crore. Company’s India wireless business is expected to
JMM jas reduced Bharti’s FY24 Revenue and EBITDA estimates by a marginal 1% to account for the continuing devaluation in the Nigerian currency however, its 1-year DCF-based target price has gone up to Rs 1,175 from Rs 1,125 and 3-year DCF-based target price has risen to Rs 1,665 from Rs 1,625 as it has rolled forward its valuations.
Bharti remains its top pick amid a structural uptrend in industry ARPU driven by future investment needs. The industry requires an ARPU of Rs 270-300 in the next 3-5 years for a pre-tax RoCE of 12-15% to justify capex. Bharti will be the biggest beneficiary of higher tariffs given the sticky and premium quality of its subscribers, ensuring that tariff hikes flow through to ARPU.
Bharti’s India wireless ARPU is likely to grow at a CAGR of 9% to Rs 300 in FY28 versus Rs 203 in 2QFY24) hence JMM estimates consolidated EBITDA CAGR of 13% over FY23-28.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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