Bharti Airtel's Q1FY21 performance was stable on the operating front. Key highlight was ARPU growth of ~1.8% at Rs. 157 (vs. expectation of ~2% QoQ decline), in a challenging quarter coupled with continued expansion in India wireless margins. Consolidated revenue was at Rs. 23939 crore, up 0.9% QoQ. Indian wireless revenues at Rs. 12,877 crore, fell 0.6% QoQ while Africa revenues were down 0.6% QoQ at Rs. 6451 crore. Consolidated EBITDA margins were at 43.5% (up 60 bps QoQ). The margin expansion was led by Indian margin, up 160 bps QoQ at 44.3% (we expected flattish margins) with Indian wireless margins at 40.6%, up 140 bps QoQ, largely a function of tariff hike pass through and cost control.
Valuation & Outlook
Bharti Airtel continues to report a stable KPI across and also enjoys a comfortable leverage vis-à-vis peers. With robust performance amid challenging times, Airtel is one the better placed telecom players. We see the favourable industry structure of three players (two being strong), a good enough kicker for eventual hike in tariff as well as superior digital play in long term. Current valuations underestimate massive possibility of growth in a consolidated market and the resilience shown by Airtel so far. We maintain our BUY rating on the stock with a DCF based target price of Rs. 700/share.
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Shares of BHARTI AIRTEL LTD. was last trading in BSE at Rs.554.85 as compared to the previous close of Rs. 552.85. The total number of shares traded during the day was 528109 in over 8729 trades.
The stock hit an intraday high of Rs. 559 and intraday low of 546.45. The net turnover during the day was Rs. 293199582.