Bharti Airtel Q1 results: Here’s how to approach this telecom stock; ARPU, subscriber base eyed

Bharti Airtel retained its top spot in the active subscriber base market with 32.1% market share. The subscriber trends from April 2020 point to a soft 1QFY21

Bharti Airtel is scheduled to announce April-June quarter earnings on Wednesday, July 28, 2020. In today’s trade, Bharti Airtel stock was among top index contributors and climbed over 2.5 per cent to hit a day’s high of Rs 573.60 apiece on BSE. The stock quoted its 52 weeks high of Rs 611.70 apiece on May 20. Ahead of Q1 results, analysts hold mixed views on the stock, some recommending to remain on a buy-side while others advise to adopt a cautious approach. Analysts believe that this large-cap telecom stock is strong and in a long term bullish rally, forming higher highs and higher lows. “In case of good numbers posted by the telecom company tomorrow, any breach above the 600 levels could fuel a bullish rally towards 640-650 levels. Similarly, any breach below the 535 levels may take the stock toward 465-460 levels in the short term perspective,” Ravi Singh, Head of Research, Karvy Stock Broking told Financial Express Online.

Adopt ‘buy on dips’ strategy

“As the telecom sector, especially large-cap stock are trading in bullish territory, investors should adopt buy in dips strategy,” Rajesh Palviya, Head Technical & Derivatives, Axis Securities, told Financial Express Online. He further explained that Bharti Airtel is looking attractive and trading above all its long term moving averages. “It has good support around 530-500 level one can buy and accumulate stock in corrective action once stock manages to give breakout above 620 level it may scale up towards 700-740 in coming months,” he added.

Bharti Airtel top buy pick

Meanwhile, on the back of the nationwide lockdown to curb the fast-spreading coronavirus pandemic, the telecom sector’s active subscriber base fell sharply in April by 31 million. All operators witnessed a fall in the active subscribers with Vodafone Idea at 14 million, Bharti Airtel at 8 million and Reliance Jio at 7 million. Still, Bharti Airtel retained its top spot in the active subscriber base market with 32.1% market share “The subscriber trends from April 2020 point to a soft 1QFY21. However, the decline in Bharti Airtel’s active subscriber was the lowest decline in Metro and A-circles, which was impressive as compared to Reliance Jio,” said Jefferies in its latest report. The brokerage firm maintained Bharti Airtel as its top pick.

Key things to watch out for in Q1 results:

Investors may need to focus on the details like non-wireless income, subscriber addition or decline numbers during the last quarter, ARPU, retention of the low-cost subscriber base, trends in revenues of data and voice customers and domestic broadband income. “We expect Bharti Airtel may post losses to the tune of 300 crore given the income losses due to Covid-19 scenario in the said segments,” said Ravi Singh.

April-June quarter earnings will provide key insights into the way telecom sector handled COVID-19 and way forward. “On one hand, voice usage could be down, but data-usage is expected to rise. The stock has gained 23.6% so far, this calendar year, indicating the investor confidence in the company, since the advent of Jio. Overall, subscriber base and ARPU growth numbers will be keenly watched,” Aamar Deo Singh, Head Advisory at Angel Broking, told Financial Express Online.

A report by Emkay Global Financial Services highlighted that wireless revenues of Bharti Airtel is likely to fall in the first quarter on the back of nationwide lockdown as it led to delayed recharges, fewer subscriber additions, and absence of international roaming revenues for telcos.

(The stock recommendation in this story are by the respective research and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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