Brokerages bullish on Bharti Airtel post robust Q3 results

Brokerages retained their bullish view on Bharti Airtel after it posted better-than-expected financial results for the quarter ended December 31.

The telecom major on Wednesday reported a consolidated net profit of Rs 854 crore in the third quarter, mainly on account of high revenue customers and increase in subscriber base in India. It had registered a loss of Rs 1,035.30 crore in the same period a year ago.

B&K Securities maintained ‘Buy’ call on Airtel with a target price of Rs 725, indicating an upside of 19.83% from the current market price of Rs 605.

“We maintain Bharti Airtel as top pick in telecom services segment. It has better balance sheet compared to Vodafone Idea and has almost completed its 4G related capex. It is well placed to hold on to its subscriber base in the face of competition from RJio. The stock is the best bet to benefit from Arpu (average revenue per user) recovery in the sector on account of tariff hike and shift in customer mix towards 4G technology.”

The company also reported the highest-ever consolidated quarterly revenue of Rs 26,518 crore, up 24.2% from Rs 21,344 crore in the corresponding quarter of 2019-20.

Global brokerage firm CLSA also maintained ‘Buy’ call on Bharti Airtel with a price target of Rs Rs 730, while Goldman Sachs raised the target to Rs 675 from Rs 645 earlier.

Bharti Airtel’s India business surged 25.1% to Rs 19,007 crore during the December quarter as against Rs 15,194 crore in the year-ago period. Earlier, Bharti Airtel had slipped into loss in the second quarter of 2019-20 after making provision of Rs 28,450 crore for adjusted gross revenue following a Supreme Court order. The company had posted its biggest net loss of Rs 23,045 crore in the quarter ended September 2019.

“Despite the unprecedented volatility that we have confronted through the year, we delivered another strong performance this quarter. This consistency in performance was across every part of our portfolio, as reflected in market share growth across all our business segments,” Bharti Airtel MD and CEO – India and South Asia – Gopal Vittal said in a statement.

Axis Securities is also positive on Airtel with a price target of Rs 676. “We maintain our Arpu assumptions and forecast 13%/17% CAGR for revenue/EBIDTA over the period FY20-23E. Profit growth will be even more significant considering FY20E was a loss for the company. Our forecast is based on significant Arpu improvement from current Rs 162/subs/month (Q2FY20) to Rs 208/subs/month by end of Q4FY23.”