YES Securities' research report on Bharti Airtel
The 4QFY22 consolidated operating profits at Rs 160bn, missed our estimates, however stood in‐line with street estimates. The miss on our estimates stemmed from higher than estimated operating expenses and lower than estimated ARPU. The ARPU accretion continued over the 4QFY22, following the 20% price revision undertaken across pre‐paid plans in late Nov’21, on staggered recharges by subscribers. The SIM consolidation phase in BHARTI’s India mobile business appears to be over with addition of 3mn subscribers during the quarter. The high value subscribers continued to improve engagement with the network over the quarter, while there was some attrition at lower end of the subscriber base. BHARTI believe that there is scope for further increment in mobility ARPU and price revision are expected in later part of the FY23. Maintain BUY on expectation of improvement in cash‐flows and return ratios as ARPUs improve with tariff hike and premiumization of subscriber base.
We value BHARTI on SOTP basis at Rs 905/sh, implying a target EV/EBITDA multiple of 7.6x FY24e, vs 6.1x as implied by CMP. With net addition of mobility/4G subscriber in the quarter, the SIM consolidation appears to be over. Going ahead incremental price revision and shift of 2G base to 4G would continue to drive ARPU improvement. We accordingly estimate an operating earnings CAGR (FY22‐24e) of 18%, backed by continual subscriber gain and ARPU improvement.
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