Motilal Oswal's research report on Bharti Airtel
Consolidated revenue/EBITDA grew 1% QoQ due to soft 1% growth in each of the India Mobile/Africa businesses. As expected (recent report), capex rose 23% QoQ to INR114b, leading to moderation in FCF and deleveraging. In the near term, we believe earnings growth is expected to remain soft due to slow market share gain, limited tariff hikes and moderating 4G mix benefits. Moreover, higher capex for the 5G rollout and rural coverage could lead to moderate FCF generation. As a result, we believe the stock could remain range-bound in the near term. However, the company is well poised to benefit from sectoral tailwinds for the next two years (EBITDA CAGR of 12% over FY23-25E). Reiterate our BUY rating on the stock.
Outlook
We value BHARTI at INR950 based on SoTP, assigning an EV/EBITDA ratio of 10x/5x to the India Mobile/Africa businesses. Retain BUY on the stock.
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