Sharekhan's research report on Bharti Airtel
Bharti Airtel reported strong revenue performance beating our revenue and EBITDA estimates led by strong growth in India Wireless and Africa Business revenues which grew 4% each q-o-q. India Wireless EBITDA margin at 52.4% was up 116 Bps q-o-q due to strong jump in ARPU up 3.7% q-o-q and lower SUC charge. Company reported strong Revenue growth in India Non mobile Business with Home Services and Enterprise growing 6.8% each q-o-q. Home Services business added 4,17,000 customers in Q2FY23and reached the total customer base of 5.2 million broadband customers. The company continued to deliver strong ARPU at Rs 190 for Q2FY23 from Rs183 in Q1FY23. 5G rollout is expected to boost the company’s long-term growth and further support ARPUs. However, the rollout would lead to increase in capex and lead to an uptick in near term debt levels. FCF remained healthy (up 4.6% q-o-q) at Rs. 10,674 crores, led by decent growth in EBITDA. Company said for the next 2-3 years it will use its operating cash flows to retire debt, make prepayments and for capex requirements.
Outlook
We maintain a Buy with a revised PT of Rs. 1010, owing to robust growth potential, strong FCF generation, market share gains in its key portfolios and reasonable valuation.
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