PL Stock Report: Bharti Airtel (BHARTI IN) - Q1FY24 Result Update - Improved subscriber mix drives performance - Downgrade to 'Accumulate'

Bharti Airtel (BHARTI IN) - Swarnendu Bhushan - Co-Head of Research, Prabhudas Lilladher Pvt Ltd

Rating: ACCUMULATE | CMP: Rs890 | TP: Rs935

Q1FY24 Result Update - Improved subscriber mix drives performance

Quick Pointers:

§ Highest ever post-paid addition of 0.83mn subscribers; Bharti’s India Mobile ARPU touched Rs200 after ~10years.

§ Maintained pole position in B-B segment; witnessed increased demand in data and core connectivity related solutions.

Bharti Airtel (BHARTI) reported another strong set of results with consolidated EBIDTA/NI of Rs196.0bn (+4.8%QoQ; PLe Rs188.5bn)/Rs16.1bn (-46.4%%QoQ; PLe Rs21.5bn). The drop NI is on account of Foreign Exchange loss of Rs34.2bn in devaluation of Naira by ~62%. Bharti’s India mobile revenues were up 4.3%QoQ and EBIDTA margins expanded to 54.8%. ARPU reached the Rs200 mark (PLe Rs196) after ~10 years owing to improved subscriber mix. Africa Revenue/EBITDA was up 2.7%/3.6%QoQ and Enterprise revenue increased by 5.6%, while EBIDTA margin contracted by 160bps QoQ. Home services (fixed line + broadband) along with DTH EBITDA increased by 6.0%/4.5% each.

We remain structurally positive on Indian telecom and BHARTI given its favorable competitive structure. Also aggressive customer focused growth plans will create a virtuous cycle of growth for Bharti, in our view. Given recent run up in stock price, we downgrade our rating to ‘Accumulate’ from Buy at SOTP based PT of Rs935 (Rs923 earlier) even as we marginally increase FY24/FY25 ARPU to Rs210/Rs238.

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