Accumulate Bharti Airtel; target of Rs 2,259: Prabhudas Capital

Prabhudas Capital's research report on Bharti Airtel

Airtel delivered a strong growth, beating key parameters. Consol. EBITDA grew +35.3%/+6.2% YoY/QoQ to Rs 295bn (PLe: Rs 268.9bn, BBGe: Rs 286.9bn), while Adj PAT came in at Rs 67.9bn (Ple Rs 53.8bn, BBGe Rs 67.3bn, +52.7% YoY, +14.2% QoQ) led by growth in India and Africa operations. India revenue rose by +10.6% YoY & +2.9% QoQ led by sustained momentum in Mobile and Home Services, partly offset by softness in Digital and Enterprise segments. India Mobile revenue stood at Rs 281.1bn, +13.2% YoY and +2.6%QoQ with EBITDA margin of 60.3% due to higher realizations and expanding customer base.

Outlook

ARPU improved to Rs 256 (+9.8% YoY / +2.3% QoQ) with 1.4mn net adds. Home services revenue grew 30.2% YoY and 8.5% QoQ. Digital services revenue declined -0.7% YoY and -1.3% QoQ, while Enterprise services rev. declined -6.7% YoY, but improved +4.3% QoQ. We remain optimistic on India business due to expected increase in ARPU and net subscriber base. We continue to maintain ‘Accumulate’ rating with a TP of Rs 2,259 (earlier Rs 2,090) based on 14x FY27/FY28E EV/EBITDA for India business and adding the value of its investments in Airtel Africa, Indus Towers and Bharti Hexacom.

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