Bharti Airtel share price targets upped as market bets on tariff hikes post elections 2024
Bharti Airtel Ltd is in an enviable position today, generating Rs 10,000 crore of quarterly free cash flow, which should further improve with peak 5G capex behind, said Nuvama Institutional Equities.
- May 16, 2024,
- Updated May 16, 2024 7:54 AM IST
Bharti Airtel's March quarter results were somewhat modest, partially impacted by currency depreciation in Africa and muted growth in the India mobile business. Analysts have, however, upped their target prices on the telecom stock post Q4 results, as bets on tariff rate hikes post Lok Sabha elections 2024 grow stronger.
Bharti Airtel reported a 31.1 per cent year-on-year (YoY) drop in net profit at Rs 2,072 crore for the March quarter compared with Rs 3,006 crore in the same quarter last year. Revenue grew 4.4 per cent YoY to Rs 37,599 crore from Rs 36,009 crore YoY.
Airtel said Q4 India revenues came in at Rs 28,513 crore, up 12.9 per cent YoY. Mobile revenues rose 12.9 per cemt YoY on account of improved realisation and strong 4G/5G customer additions during the year. ARPU for the quarter stood at Rs 209 compared with Rs 193, driven by sustained focus on acquiring quality customers and mix improvement.
Bharti Airtel Ltd is in an enviable position today, generating Rs 10,000 crore of quarterly free cash flow, which should further improve with peak 5G capex behind, said Nuvama Institutional Equities.
"The VIL FPO-led potential tariff hikes are only expected to boost its cash flows and strengthen its already strong balance sheet and cash flow profile," it said while upping its target price for Bharti Airtel to Rs 1,600 from Rs 1,580 earlier.
As per the Airtel management, it will take a couple of rounds of tariff hikes for ARPU to increase from Rs 200 to Rs 300 level. Emkay Global see one round of tariff hike by mid-FY25E that can help Bharti Airtel's ARPU reach Rs 270 by FY26E.
Emkay said Bharti Airtel should benefit from subscriber gain from Vodafone Idea, with the launch of 5G and mix change, as it can move users to 4G/5G from 2G.
It is also seen gaining from expected tariff hike and historically higher pass-through of the increase in revenue to Ebitda. Emkay has upped its price target for Bharti Airtel to Rs 1,400 from Rs 1,325 per share.
"We raise our FY25 and FY26 estimates by building in tariff hikes each year. We factor in 12 per cent/16 per cent revenue / Ebitda growth over FY24-26E. The company has the opportunity to grow its Ebitda by 40-50 per cent and halve its net debt over the next 2-3 years. It is well poised to benefit from the sector tailwinds resulting from market share gains, improved ARPU driven by the premiumisation of customers and tariff hikes, and non-wireless segments such as Home and Enterprise," said Motilal Oswal Securities.
This broking firm has a target of Rs 1,640 for Bharti Airtel.
Bharti Airtel's March quarter results were somewhat modest, partially impacted by currency depreciation in Africa and muted growth in the India mobile business. Analysts have, however, upped their target prices on the telecom stock post Q4 results, as bets on tariff rate hikes post Lok Sabha elections 2024 grow stronger.
Bharti Airtel reported a 31.1 per cent year-on-year (YoY) drop in net profit at Rs 2,072 crore for the March quarter compared with Rs 3,006 crore in the same quarter last year. Revenue grew 4.4 per cent YoY to Rs 37,599 crore from Rs 36,009 crore YoY.
Airtel said Q4 India revenues came in at Rs 28,513 crore, up 12.9 per cent YoY. Mobile revenues rose 12.9 per cemt YoY on account of improved realisation and strong 4G/5G customer additions during the year. ARPU for the quarter stood at Rs 209 compared with Rs 193, driven by sustained focus on acquiring quality customers and mix improvement.
Bharti Airtel Ltd is in an enviable position today, generating Rs 10,000 crore of quarterly free cash flow, which should further improve with peak 5G capex behind, said Nuvama Institutional Equities.
"The VIL FPO-led potential tariff hikes are only expected to boost its cash flows and strengthen its already strong balance sheet and cash flow profile," it said while upping its target price for Bharti Airtel to Rs 1,600 from Rs 1,580 earlier.
As per the Airtel management, it will take a couple of rounds of tariff hikes for ARPU to increase from Rs 200 to Rs 300 level. Emkay Global see one round of tariff hike by mid-FY25E that can help Bharti Airtel's ARPU reach Rs 270 by FY26E.
Emkay said Bharti Airtel should benefit from subscriber gain from Vodafone Idea, with the launch of 5G and mix change, as it can move users to 4G/5G from 2G.
It is also seen gaining from expected tariff hike and historically higher pass-through of the increase in revenue to Ebitda. Emkay has upped its price target for Bharti Airtel to Rs 1,400 from Rs 1,325 per share.
"We raise our FY25 and FY26 estimates by building in tariff hikes each year. We factor in 12 per cent/16 per cent revenue / Ebitda growth over FY24-26E. The company has the opportunity to grow its Ebitda by 40-50 per cent and halve its net debt over the next 2-3 years. It is well poised to benefit from the sector tailwinds resulting from market share gains, improved ARPU driven by the premiumisation of customers and tariff hikes, and non-wireless segments such as Home and Enterprise," said Motilal Oswal Securities.
This broking firm has a target of Rs 1,640 for Bharti Airtel.