Bharti Airtel up 2%, nears 52-week high on successful QIP offering

Crisil removed its rating on the long term bank facilities and NCDs of Bharti Airtel from 'Rating Watch with Negative Implications'.

Shares of Bharti Airtel gained 2 per cent to Rs 477 on the BSE on Thursday after a successful fund raising exercise through completion of qualified institutional placement (QIP) and pricing of foreign currency convertible bonds (FCCBs).

The stock of the country’s largest integrated telecommunications company was trading close to its 52-week high of Rs 486, touched on December 2, 2019.

Bharti Airtel raised $2 billion (approx. Rs 14,000 crore) through the QIP route. The company issued 323.6 million equity shares at the price of Rs 445 per share. Post the QIP issues, the holding of promoter and promoter group will be 58.98 per cent as against 62.70 per cent.

The company said the net proceeds of the fund raised will primarily be used to augment the company's long term resources and strengthen the balance sheet, servicing and for repayment of short term and long term debts capital expenditures, statutory dues and long term working capital requirements.

In the past four trading days, Bharti Airtel has gained 4.4 per cent against 1 per cent rise in the S&P BSE Sensex. On Monday, January 13, 2020, rating agency Crisil removed its rating on the long-term bank facilities and non-convertible debentures (NCDs) of Bharti Airtel from 'Rating Watch with Negative Implications', while reaffirming the rating at 'CRISIL AA' and assigning a 'Stable' outlook.

The recent industry-wide tariff hikes should support the improvement in Earnings before interest, tax, depreciation, and amortisation (EBITDA). CRISIL expects the average revenue per user (ARPU) of Bharti Airtel to increase to Rs 140-145 in fiscal 2021 from Rs 128 for the quarter ended September 30, 2019. CRISIL, therefore, expects Bharti Airtel to continue with its prudent approach, and maintain net debt to EBITDA1 (leverage) ratio at below 3 times for fiscal 2021.

“There has been consistent improvement in Africa operations, as demonstrated by the increase in EBITDA margin to 44.1 per cent in the quarter ended September 30, 2019, from 43.2 per cent in the corresponding period of the previous fiscal. Operating performance of other businesses’ digital TV, broadband, fixed line, and Airtel business services’ have also remained strong, with a healthy EBITDA margin. Performance in these businesses should remain stable, thereby partially supporting cash accrual against pricing pressure in the India mobility business,” Crisil said in rating rationale.