Airtel Q1 Results Review: Capex Moderation, Healthy Cash Flow Growth Are Key Positives
These two factors are key positives in the telecom giant's first quarter earnings for financial year 2025, despite missing net adds and soft trading outside of homes, JPMorgan said.
Moderation in Bharti Airtel Ltd.'s capital expenditure in India and healthy free cash flow have enhanced the outlook for earnings going forward, analysts said.
These two factors are key positives in the telecom giant's first quarter earnings for financial year 2025, despite missing net adds and soft trading outside of homes, JPMorgan said in a note on Tuesday.
Bharti Airtel's consolidated net profit rose 128% sequentially to Rs 4,717.50 crore, against Rs 3,661.4 crore estimate by a Bloomberg survey on the back of a one-time interest waiver on various license fees.
Capex on India wireless and overall moderated to 19% and 20% sequentially, respectively, according to JPMorgan. The lower capex will help Bharti Airtel increase its India operation's free cash flow by 30% sequentially and 83% on an annualised basis.
JPMorgan remained 'overweight' on Bharti Airtel with a Rs 1,500 target price, which implied a 2.1% upside from Monday's closing price.
Free cash flow is what a company generates after accounting for cash outflows to run its operations.
The decline indicates Airtel's 4G and 5G rollouts could be near completion. The company has generated $2.3 billion of free cash flow in the last 12 months, Goldman Sachs said in a note.
Goldman Sachs has kept a 'buy' on the stock and raised the target price to Rs 990 apiece from Rs 920 apiece, implying a 32% downside from Monday's closing price.
Bharti Airtel's consolidated revenue fell slightly below Citi Research's estimates due to weakness in its Africa business, the brokerage said in a report. It has kept a 'buy' on the stock with a target price of Rs 1,750 apiece, which implied a 19.1% upside from Monday's closing price.
According to Citi Research, Airtel's India capex decreased in line with past management commentary, driving an increase in free cash flow generation and leading Airtel to defer the balance rights' issue amount.
Going forward, analysts recommend monitoring management commentary on capital expenditure and free cash flow, given that it has raised the right issues.
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Shares of Bharti Airtel rose as much as 1.86% to Rs 1,492.90, the highest level since Aug 2. It erased all gains to trade 0.89% lower at Rs 1,452.60 as of 10:44 a.m., compared to 0.35% advance in the NSE Nifty 50 index.
The stock gained 62.92% in last 12 months and rose 40.91% on year to date basis. Total traded volume so far in the day stood at 0.59 times its 30-day average. The relative strength index was at 49.23.
Out of 33 analysts tracking the company, 23 maintain a 'buy' rating, eight recommend a 'hold,' and two suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 5.4%
