Bharti Airtel share price soars 2% on sixfold jump in Q1FY23 net profit; should you buy, sell or hold?

Bharti Airtel share price jumped 2% to Rs 719 apiece on BSE on Wednesday, a day after the telecom major’s on-year consolidated net profit soared sixfold

Bharti Airtel, stock, stock market
On Tuesday, Bharti Airtel managing director and CEO Gopal Vittal said that Bharti Airtel will start rolling out 5G services this month and cover all towns and key rural areas

Bharti Airtel share price jumped 2% to Rs 719 apiece on BSE on Wednesday, a day after the telecom major’s on-year consolidated net profit soared sixfold in the first quarter of FY23, led by strong revenue growth and 4G customer addition. Bharti Airtel reported a on-year jump of 5.6 times in net profit to Rs 1,607 crore in Q1FY23, as compared to a profit of Rs 284 crore in the same quarter last year. The stock had hit a 52-week high of Rs 781.90 apiece last year in November. The stock is still 9% away from its 52-week high. At least three research and brokerage firms have given buy rating to the stock, see nearly 30 per cent upside potential. On Tuesday, Bharti Airtel managing director and CEO Gopal Vittal said that Bharti Airtel will start rolling out 5G services this month and cover all towns and key rural areas of the country by March 2024.

Also read: Airtel to launch 5G services this month, cover every town by 2024, says MD

Motilal Oswal Financial Services

BUY | Target price: Rs 910 | Upside: 29%

Analysts said that the stock is trading at 8x consolidated FY23E EV/EBITDA with India business trading at slightly below 10x. In the past, being an annuity business, Bharti has garnered low valuation multiple. Concern of intensified 5G-led capex has put pressure on the stock in the last few months. However, the potential FCF of more than Rs 300 billion may still remain strong if the capex grows in the near term, Motilal Oswal said in a report. We see potential upsides for both India and Africa businesses aided by steady earnings growth. “We value Bharti on FY24E, assigning 11x EV/EBITDA to the India Mobile business and 5x to the Africa business, and arriving at our SoTP based TP of INR910. The ensuing earnings growth, 5% FCF yield, and ~25% deleveraging augur well for the stock,” they said.

Edelweiss Research

BUY | Target price: Rs 866 | Upside: 23%

Bharti Airtel (Bharti) clocked steady Q1FY23 results with 2.8% sequential growth in ARPU – adding 4.5mn 4G subscribers. Enterprise and the homes services businesses are also witnessing good traction. “We are already building-in higher capex on account of the 5G rollout; the speed of the rollout, competitive response and customer adoption will determine the capex’s quantum,” analysts said. With vastly differing 5G strategies, Bharti Airtel’s execution versus Reliance Jio (RJio), and the evolution of their respective ecosystems will chart the course of their market share. The research firm has reiterated buy with a target price of Rs 866 apiece.

Also read: Bharti’s profit down 20% sequentially; Arpu up 2.8%

Kotak Institutional Equities

BUY | Target price: Rs 830 | Upside: 18%

Analysts said that Bharti Airtel reported a strong operational print in 1QFY23; reported results were in line with their estimates reflecting a healthy performance across segments. “We reiterate buy rating on the stock with a revised fair value of Rs 830, expecting the company to benefit from—(1) an improvement in industry health underpinned by rising ARPUs, (2) improvement in subscriber mix and (3) 5G rollout, which will propel Bharti’s several digital/enterprise initiatives,” they said.

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