1. Global brokerages bullish on Bharti Airtel shares despite dismal Q3 results, but watch out for these concerns

Global brokerages bullish on Bharti Airtel shares despite dismal Q3 results, but watch out for these concerns

Global brokerages CLSA and Nomura have maintained ‘buy’ call on Bharti Airtel despite the telecom major posting dismal Q3 results on Thursday. Bharti Airtel reported over 39 percent fall in its consolidated net profit for the third quarter ended December 31, 2017 to about Rs 306 crore.

By: | Published: January 19, 2018 11:15 AM
Bharti Airtel, airtel, news on airtel, latest news on airtel, Bharti Airtel Q3 Result, Trai, interconnect usage charge, Gopal Vittal, Reliance Jio, Ebitda, India mobile services revenue , Kotak Institutional Equities  The foreign brokerage maintained ‘buy’ call on the shares of Bharti Airtel. (Image: Reuters)

Global brokerages CLSA and Nomura have maintained ‘buy’ call on Bharti Airtel despite the telecom major posting dismal Q3 results on Thursday. Bharti Airtel reported over 39 percent fall in its consolidated net profit for the third quarter ended December 31, 2017 to about Rs 306 crore. The company’s net profit stood at Rs 504 crore in the same period previous fiscal. Bharti Airtel share is trading at Rs 495 on NSE at the time of reporting.Bharti Airtel Limited is an Indian global telecommunications services company based in New Delhi, India. Bharti Airtel operates in 17 countries across South Asia and Africa. Airtel provides GSM, 3G and 4G LTE mobile services, fixed line broadband and voice services depending upon the country of operation.

CLSA: The foreign brokerage maintained ‘buy’ call on the shares of Bharti Airtel. The stock will see improved valuations, CLSA says. CLSA maintained a ‘buy’ rating on the share with a target price of Rs 640 implying an upside of nearly 29 percent. Airtel’s mobile APRU for India in Q3 has surprised positively, says CLSA. The brokerage estimates Profit After Tax (PAT) to be in between 1-9 percent by FY19-21.

Nomura: Nomura maintained a ‘buy’ call on Bharti Airtel with target unchanged at Rs 625 per share implying an upside of nearly 26%. For Nomura, the revenue target miss is driven by India mobile and comes in at 6 percent below estimates.

Concerns

Merrill Lynch offloaded shares worth Rs 1,931 crore in telecom operator Bharti Airtel, through an open market transaction, PTI reported. The shares were disposed of at an average price of Rs 499.1 apiece, valuing the transaction at Rs 1,931.23 crore, the data showed. At the end of December quarter, Merrill Lynch held 5.09 crore shares of the telecom major. The shares were bought by SRS Partners (Cayman) LLC.

In addition to the pricing war with Jio, last year, Trai more than halved interconnection fees as well. The company – which competes with the operators like Vodafone, Idea Cellular and newcomer Reliance Jio in the highly-competitive telecom market in India – saw its overall revenue declined 13 percent to Rs 20,319 crore. Its revenue was pegged at Rs 23,336 crore in the corresponding period last financial year. Other than domestic termination rate reduction, Africa and Bangladesh divesting operating units also added to troubles. “Regulatory fiat in the form of a cut in domestic IUC (Interconnection Usage Charges) rates have exacerbated the industry ARPU (Average Revenue Per User) decline in Q3’18,” Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said in a statement.

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