As expected, Bharti delivered a strong growth in the fourth quarter because of tariff hikes. Its subscriber mix continued to improve, led by its network investments. Homes and enterprise segments surprised positively, while DTH and Africa disappointed. FCF generation was strong and leverage at 2.5x was comfortable. We lower our Ebitda estimates by 1-2% on higher diesel prices and expect Bharti to deliver 20% Ebitda CAGR over FY22-25.
We reiterate our ‘Buy’ rating with revised price target of
880. Strong 4Q results: Bharti Airtel's 4QFY22 revenues at31,500 crore (+22% YoY) slightly missed estimates due to Africa ops, but Ebitda at
16,000 crore (+29% YoY) was ahead of estimates. While PBT at5,000 crore was ahead of estimates, profits at
2,000 crore missed estimates due to higher-than-expected tax provisions and minority interest. Arpu-led growth: Bharti's India mobile revenues (+25% YoY) were in line with estimates, driven by a 23% YoY rise in Arpus to178. This was due to tariff hikes as well as improvement in the subscriber mix. While churn remained elevated due to the doubling of voice tariffs, higher gross adds surprised positively.
Bharti continues to see healthy additions among 4G (+5 m) and postpaid (0.2 m) users. Data traffic growth was strong at 5% QoQ, reflecting acceptance of recent tariff hikes. India mobile margins at 50.6% were up 130 bps QoQ but slightly missed estimates. The sharp rise in diesel prices is likely to impact India mobile margins further. We cut our India mobile Ebitda estimates by 3% to factor this. However, we still expect Bharti to deliver 18%/24% CAGR in India-mobile revenue/Ebitda over FY22-25.