Bharti Airtel gains 4% on on plans to raise fund via preferential issue

The company's board will meet on January 28, to consider raising funds via a preferential share issue to investors other than its promoter group.

Shares of Bharti Airtel moved 4 per cent higher to Rs 717.50 on the BSE in Tuesday’s intra-day trade in an otherwise range-bound market after the telecom services provider announced its plan to raise funds via preferential issue.

Bharti Airtel informed the exchanges on Monday market hours that its board will meet on January 28, to consider raising funds via a preferential share issue to investors other than its promoter group.

On January 7, 2022, Bharti Airtel had said that it will pay interest on the deferred spectrum and adjusted gross revenue (AGR) liabilities, and will not issue equity to the government. The company informed the Department of Telecommunications (DoT) that it will not avail the option of conversion of interest on these dues into equity, it had said in a notification to the stock exchanges. Airtel owes the government around Rs 1 trillion in spectrum and AGR dues as of now.

The stock of Bharti Airtel has outperformed the market recently, gaining 5 per cent in the last one month, when compared to a marginal 0.16 per cent rise on the S&P BSE Sensex. In the last three months, the stock has gained 3 per cent, as against a 6 per cent decline recorded by the benchmark index. Further, in the on a six-month time frame, the stock has rallied 32 per cent, as against a 8 per cent gain on the Sensex. The stock price of Bharti Airtel had hit a record high of Rs 782 on November 24, 2021.

“We continue to believe that strong momentum in revenue backed by continued growth in customer additions and improved margins support the growth prospects for the company in long term. Airtel’s strong brand presence coupled with its executional capabilities will help drive the top line growth and healthy margins,” Anand Rathi Share and Stock Broker said in Q2FY22 result update.

In October-December quarter (Q3FY22), Bharti should lead the telecom pack with a 6 per cent quarter-on-quarter (qoq) rise in earnings before interest tax and depreciation and amortisation (EBITDA), supported by ~110bps margin expansion in the India business, analyst at Emkay Global Financial Services said in sector update.

 “Tariff hike effective from Nov-end should partially reflect in a 6 per cent qoq ARPU increase. The subscriber base is expected to remain flat qoq, even after weak 2Q, which can be attributable to continued SIM consolidation, especially at the bottom-of-the-pyramid subscriber level. We are estimating 4.5mn data subscriber adds for the quarter. Home broadband and Airtel business should continue to track well, with healthy operating performance. The African unit should also see a steady performance, helped by stable currencies,” the brokerage firm said.