Bharti Airtel Q1 Results Review - Catalyst Missing: Dolat Capital

Dolat Capital Report

Bharti Airtel Ltd.’s Q1 FY25 operating and financial performance was in-line. Consolidated revenue grew 2.8/2.4% and Ebitda 0.2/1.8% YoY/QoQ. However, currency depreciation in Africa impacted YoY performance. Thus, Ebitda margin declined for third consecutive quarter.

The company’s solid growth trajectory driven by superior execution makes it a healthy compounding story with multiple triggers including-

1. tariff hike-led ARPU growth (~13% compound annual growth rate over FY24-27), with another hike 18-24 months away,

2. 5G pick-up,

3. accelerated growth in Home BB and Enterprise,

4. benefits from AGR liability reduction and deleveraging,

5. weakening of Vodafone Idea Ltd., if any and

6. potential listing of Jio.

We reduce our FY25-27E Ebitda by -0.3/-1.1/-2.5% to factor tad soft margins. We remain constructive on Bharti driven by multiple growth triggers highlighted above. But given the sharp stock price run-up of 32/65% in last six/12 months, catalysts will likely be gradual and partly priced in.

Bharti is largely domestic and defensive play and shall do well in a weaker market. We reiterate ‘Reduce’ rating with a revised target price of Rs 1,400 @ 12 times H1 FY27E enterprise value/Ebitda for India Wireless (earlier Rs 1,440)

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