Bharti Airtel trades weak despite strong Q4; down 5% from intra-day high

Shares of Bharti Airtel were down 3 per cent to Rs 689.05 on the BSE in Wednesday’s intra-day trade. The stock erased opening gains despite the company reported nearly three-fold increase in net profit to Rs 2,008 crore in the March quarter results (Q4FY220, led by gains from tariff hike and exceptional income. In the same quarter last year, India's second biggest telecom operator had posted net profit of Rs 759 crore.

The stock of Bharti Airtel slipped 5 per cent from its intra-day high of Rs 727.55. While it opened 2.5 per cent higher at Rs 725.40 on the BSE, the stock later slipped 2 per cent lower at Rs 692.55 at 01:58 pm. In comparison, the S&P BSE Sensex declined 0.11 per cent.

Meanwhile, consolidated revenue for the quarter rose 22.3 per cent to Rs 31,500 crore on a year-on-year basis while average revenue per user (ARPU) grew 9.2 per cent sequentially and over 22 per cent on a year on year basis to Rs 178.

In November, 2021, mobile service providers undertook a 20 per cent tariff hike resulting in revenue growth for all the companies. Airtel’s fourth quarter result was also boosted by exceptional income of Rs 906 crore that included gains from sale of telecom tower assets and settlement with a strategic vendor. CLICK HERE FOR MORE DETAILS

In the past one week, Airtel has underperformed the market by falling 4 per cent, as compared to 0.28 per cent rise in the Sensex. Earlier, it had hit a record high of Rs 782 on November 24, 2021.

According to analysts at ICICI Securities, Airtel continues to report a stable performance on the Indian wireless business front. "With better key performance indicators (KPIs) in terms of subscribers’ stickiness and margins; management commentary on overall growth drivers would be key monitorables ahead," the brokerage firm added.

However, analysts at Motilal Oswal Financial Services believe that the additional stake buyout in Indus Towers has left limited scope for develeraging the telecom operator despite Rs 47 billion of free cash flow in the quarter.

"Despite robust data traffic volumes of 12b GB with 19 GB/user, the data traffic/subscriber was around 50 per cent below RJio, thus highlighting healthy network capacity and room for improvement. Airtel is now focused on increasing penetration of unique broadband towers (by adding 7k towers), but the aggressive broadband base station is behind," the brokerage firm added.