Bharti Airtel stock rises post Q1 earnings: Time to buy, sell or hold?

Shares of Bharti Airtel were trading higher today after the telco reported a 466 per cent year-on-year (YoY) rise in consolidated net profit at the end of quarter ended June 2022. Bharti Airtel stock was trading over 1 per cent higher at Rs 714 against the previous close of Rs 704.35 on BSE.

The stock opened with a gain of 2.08 per cent at Rs 719 today. Market cap of the firm rose to Rs 3.95 lakh crore on BSE.

A total of 2.46 lakh shares of the telco changed hands amounting to a turnover of Rs 17.48 crore on BSE.

The telecom share has gained 14.79 per cent in one year and risen 4.45 per cent since the beginning of this year.

The telco reported a profit of Rs 1,607 crore for the quarter ended 30 June, 2022, mainly boosted by the recent subscriber count. It had reported a profit of Rs 283.50 crore in the year-ago period.

Consolidated revenue from operations rose to Rs 32,805 crore for the quarter ended June 30, from Rs 26,854 crore in the same period last year, backed by strong and consistent performance delivery across the portfolio.

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The company's average revenue per user (ARPU) also improved to Rs 183 per user in Q1FY23 versus Rs 146 in Q1FY22.

Moreover, its consolidated earnings before interest, taxes, depreciation, and amortization, or EBITDA increased 25.9 per cent to Rs 16,604 crore, while its EBITDA margin rose 150 bps YoY to 50.6 per cent, Airtel added.

The telco's consolidated India mobile services revenue was up 27 per cent to Rs 18,220 crore as against Rs 14,306 crore in the same quarter last fiscal.

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YES Securities is bullish on the stock and has assigned a target price of Rs 910 against the current market price of Rs 704, translating into a potential return of 29 per cent.

"While the total capex during the quarter stood at Rs 6,400 crore, the capex in India mobile services stood at Rs 3,700 crore. Going ahead, while there is no specific capex guidance, but capex is likely to accelerate in near term to high intensity 5G roll out. We value Bharti on SOTP basis at Rs 910/share, implying a target EV/EBITDA multiple of 7.2 times FY24expected, vs 5.8 times as implied by the CMP. We estimate an operating earnings CAGR (FY22-24e) of 21 per cent, backed by expectations of continual subscriber gain and ARPU improvement," said YES Securities.

Bharti Airtel Q1 results: Net profit surges 466% to Rs 1,607 cr, ARPU grows to Rs 183

Emkay Global has kept its target price unchanged at Rs 850.

"We had tweaked our estimates post the auctions to factor in (if) spectrum purchase, (ii) SUC savings, and (iii) tariff hike in Q4FY23, and maintain those estimates. Capex spends and tariff hike timeline will be keenly watched. Retain Buy with an unchanged target price of Rs 850," the brokerage said.

Motilal Oswal has given a buy call to the stock.

"Subscriber additions were modest at 1.3 million v/s RJio's 10 million additions but healthier than VIL's 3.4 million decline. This was unlike the last quarter when Bharti was the only telco to add subscribers while RJio and VIL lost. Bharti's 4G subscriber additions were moderate at 4.5 million reaching 205 million subscribers (2 per cent QoQ growth), i.e., 63 per cent of total subscribers. RJio/VIL added 7m/0.9m 4G subscribers, respectively," the financial services firm said.