While tariff hikes remain the key trigger for the sector and Airtel, the company is looking to increase Arpu within its existing customer base until the hikes — expected in the second half of FY27 — materialise. While most brokerages are positive on the company’s outlook, some believe the gains are already reflected in valuations. At the current price, the telecommunications major is trading at 9x enterprise value to operating profit. The stock has delivered little over the past year and is only marginally in the green.
At the consolidated level, the company reported revenue growth of 18.4 per cent year-on-year (Y-o-Y) and 5.7 per cent sequentially. Operating profit rose 19.6 per cent Y-o-Y and 5.8 per cent quarter-on-quarter (Q-o-Q). The strong sequential growth was largely driven by the Africa business, which posted a 9.6 per cent increase, while other businesses recorded growth in the 3-4 per cent range. Consolidated operating profit margin expanded by 3 basis points (bps) to 56.9 per cent, led by a 14-bp expansion in the India wireless business.
Revenue from the India business rose 3.6 per cent sequentially, with the outperformance driven by a strong Arpu of ₹263.9, up 2.6 per cent from the fourth quarter (January-March/Q4) of 2025-26 (FY26). The gains were supported by postpaid additions and a richer 5G subscriber mix. Overall subscriber additions stood at 3.3 million compared with 4.7 million in the previous quarter, but remained higher than the FY26 average of 2.9 million. This expanded the subscriber base to 376.5 million.
Postpaid net additions of 1 million in the India mobile business marked the strongest quarterly performance in more than 13 quarters. HSBC Research remains constructive on Airtel’s structural growth drivers and expects mobile Arpu to rise, led by a tariff hike in Q1 of calendar year 2027, subscriber migration to higher data plan buckets driven by increased data usage, and continued gains in high-value postpaid subscribers. Analysts led by Piyush Choudhary forecast mobile Arpu to reach ₹310 by 2027-28. The brokerage has a ‘buy’ rating with a target price of ₹2,500.
In the Africa business, the company reported an overall subscriber base of 189 million, up 11.6 per cent Y-o-Y. Africa added 5.5 million subscribers during the quarter compared with the FY26 average of 4.4 million. Aided by a 16 per cent Y-o-Y increase in Arpu to $2.7 per month, revenue grew 45.6 per cent, while operating profit increased 52 per cent Y-o-Y.
JM Financial Research has marginally raised its FY27 to 2028-29 (FY29) operating profit estimates by 1-2 per cent, factoring in strong growth in the Africa business. The brokerage has reiterated its ‘buy’ rating, as it expects the industry’s wireless Arpu to grow at 12 per cent annually over FY26-FY29, driven by regular tariff hikes and multiple premiumisation strategies. Analysts led by Dayanand Mittal say visibility has improved for a tariff hike of around 15 per cent over the next six to 12 months, given that the last increase was in July 2024. They also cite the government’s intent to ensure a ‘3+1’ player market and the industry’s need to improve return on capital employed amid its inability to adequately monetise the significant investments made in 5G. The brokerage has a ‘buy’ rating with a target price of ₹2,400.
The home business continued to deliver robust revenue growth of 33 per cent Y-o-Y, supported by strong subscriber additions, although margins in both the home and digital television segments remained weak. Morgan Stanley Research has an ‘overweight’ rating on the stock with a target price of ₹2,480. According to analysts led by Gaurav Rateria, upside risks include higher-than-expected market share gains, steeper-than-expected tariff hikes, and monetisation opportunities from the company’s assets.
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