Bharti Airtel Q2 Results Review - Time Correction Likely; Reiterate ‘Reduce': Dolat Capital

Dolat Capital Report

Bharti Airtel Ltd.’s Q2 FY25 operating and financial performance were robust and ahead of estimates. Consolidated revenue grew 12/7.7%, Ebitda 12/10.9% and adjusted profit after tax by 53/30% YoY/QoQ aided by tariff hikes.

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

1. tariff hike-led average revenue per user growth (~13% CAGR over FY24-27), with another hike ~15-18 months away,

2. 5G pick-up,

3. accelerated growth in Home BB and Enterprise,

4. benefits from deleveraging,

5. weakening of Vodafone Idea Ltd. and

6. potential listing of Jio.

We maintain our FY25-27E and remain constructive on Bharti Airtel’s growth potential. However, following a sharp stock price run-up of 12/23/77% in last 3/6/12 months, future catalysts will likely be gradual and priced-in.

Recognizing Bharti Airtel as a defensive play that shall do well in a weaker market, we reiterate our ‘Reduce’ rating with target price of Rs 1,700 @ 12.5 times FY27E enterprise value/Ebitda for India Wireless (versus Rs 1,400 at 12 times H1 FY27E).

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