Tariff hike to aid Bharti Airtel's Q2 ARPU; profit may double QoQ: Analysts

Bharti Airtel Q2 preview: Sunil Mittal-led Bharti Airtel is expected to post an impressive sequential growth in net profit for July-September quarter (Q2FY22) on the back of steady subscriber base and tariff hike in select pre- and post-paid plans, say analysts. The telecom services provider is set to report its Q2FY22 result on Tuesday, November 2.
 

"Bharti is expected to report QoQ stronger earnings on likely improvement in average revenue per user (ARPU) to Rs 153, on account of price revision undertaken in selective prepaid and postpaid plans. However, there is a likelihood of slower customer addition on account of price increase undertaken," said analysts at YES Securities.
 

That apart, given that the company recently opted for a four-year moratorium on adjusted gross revenue (AGR) payment, analysts will track the management’s commentary on the same.


 

Here's what leading brokerages are projecting: 

Jefferies

According to the brokerage, Bharti Airtel’s growth during the quarter will be led by segmented tariff hikes taken in the second quarter ended September.
 

"Bharti's hikes in July should keep revenue growth strong over the near to medium term and we expect it to around 7 per cent quarter-on-quarter rise in revenue with steady margin," it said in an earnings preview report.
 

Jefferies said it expects India mobile revenues to grow by 7 per cent QoQ in Q2FY22, led by 7 per cent growth in ARPU to Rs 157 on the back of tariff hikes in the prepaid voice and corporate postpaid segments that were effective from August. However, it may see subscriber declines during the quarter.

 

"The key focus areas for Bharti's results will be ARPUs, the timing of further tariff hikes and capex outlay," it said.

Emkay Global Financial Services

The brokerage is penciling-in 9 per cent year-on-year (YoY) and 5 per cent quarter-on-quarter (QoQ) growth in revenue from operations at Rs 28,144.5 crore for the quarter under review. Besides, Ebitda (earnings before interest, tax, depreciation, and amortization) is seen at Rs 13,715.5 crore.
 

"Despite the steady subscriber base sequentially, we expect India wireless revenues to rise 4.6 per cent QoQ, supported by ARPU increase of 5.5 per cent, driven by the flow-through of the tariff hike in the corporate post-paid and minimum recharge plans implemented toward the latter half of July and mix improvement. Furthermore, the enterprise segment should continue to see low-single digit revenue growth on a sequential basis." it said in a preview report.


 

It added: Data subscriber additions should stand at 11.8 million. Among the non-wireless segments, we expect the home broadband business to clock 0.5 million additions.
 

At the bottom-line level, the brokerage pegs net profit at Rs 773.8 crore, compared with profit of Rs 283.5 crore in Q1FY22 and loss of Rs 763.2 crore in the year-ago period (Q2FY21).

Motilal Oswal Financial Services

Analysts here expect revenue to come in at Rs 27,666 crore, up 7.2 per cent YoY from Rs 25,785 crore. In the June quarter of the current fiscal, revenue was at Rs 26,853.6 crore.
 

Individually, the brokerage estimates Indian Wireless revenues to grow 3.2 per cent QoQ and Enterprise business to see 2 per cent sequential revenue growth.

Ebitda, meanwhile, may expand to Rs 13,309.5 crore during the quarter under reivew. It was Rs 11,848 crore in Q2FY21 and Rs 13,189.4 crore in Q1FY22. 

Further, on the back of a tax outgo of Rs 864.8 crore, the telco is expected to post a net profit of Rs 675.8 crore. The pre-tax profit, meanwhile, could be Rs 2,162 crore.

"We estimate ARPU growth of 2 per cent on QoQ basis for Q2FY22 and 2.5 per cent sequential growth of Indian Mobile subscribers," it said.

Phillip Capital

This brokerage expects ARPU to report slight growth QoQ on trimming of the tail while Ebitda margins may remain stable QoQ and expand YoY to 48.9 per cent. The latter was 48.3 per cent in Q1FY22 and 45.2 per cent in Q2FY21.