Bharti Airtel shares declined more than two percent in morning trade on Wednesday even as India’s second-largest telecom services provider reported an 18.4 percent growth in average revenue per user (ARPU) at Rs 193 for the December quarter.

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The stock was the lead loser among both Sensex and Nifty 50 stocks in morning deals. Airtel shares declined 1.53 percent to Rs 773.90 on NSE to emerge as biggest loser among Nifty 50 stocks

The brokerages, however, are upbeat about the telco’s business and gave largely positive commentary after the results.

While assigning a Buy call with a target price of Rs 995, UBS Securities noted that the Q3 results were largely in line with its estimates at an operating level. The subscriber addition momentum has improved significantly and was the highest in past seven quarters while ARPU growth was moderate, UBS stated. The SUC reduction helped improve its mobile EBITDA margins.

Goldman Sachs also assigned a Buy rating on the stock with a target price of Rs 875 per share. The brokerage house also stated that the Q3 results were in line with expectations and the growth outlook is robust.

While the wireless segment reported another quarter of revenue growth, non-wireless business growth was healthy on a YoY basis, Goldman Sachs noted.

The brokerage sees a 15 percent growth in wireless revenue during the FY23-25 period.

The CAGR is aiding free cash flow (FCF) generation, it stated while estimating an FCF of $2.5 billion for India business in FY 24.

“The stock trades at 7.7x FY24 EV/EBITDA,” it stated.

Hong Kong-based investment advisor CLSA also gave a Buy call on Bharti Airtel and projected a target price of Rs 1,015 per share. The CLSA raised the revenue growth forecast to 3-9 percent for FY24-25 and expects a 23 percent growth in India mobile EBITDA by FY25.

Morgan Stanley assigned an Overweight rating with a target price of Rs 860 per share for Bharti Airtel. It stated that the capital expenditure was higher than expectation even as the EBITDA was in line with expectations.

JPMorgan has assigned Underweight rating on Bharti Airtel and set a target price at Rs 700 per share. The brokerage stated that the Wireless EBITDA was disappointing and the capex shot up during the quarter.

A higher 5G capex, lack of tariff hikes & deflation in premium ARPU will drive down return on invested capital (ROIC), JP Morgan stated.

The brokerage said it remains circumspect on ARPU support from 4G prepaid hikes.

Airtel's average revenue per user (ARPU) for the second quarter of the fiscal rose to Rs 193 as against Rs 190 in the July to September 2022 period. Bharti Airtel chairman Sunil Mittal has been talking about hitting Rs 200 ARPU for a while now.

Bharti Airtel's revenue surged 21 percent year-on-year to Rs 35,804 crore, slightly above projections of analysts polled by CNBC-TV18.

The telco posted a net profit of Rs 1,588.2 crore, missing the CNBC-TV18 poll estimate of Rs 2,220 crore.

India business posts quarterly revenues of Rs 24,962 crore – up 19.4 percent YoY. Revenue from mobile services in India grew 20.8 percent YoY, led by continued 4G customer addition and an increase in ARPU, the company stated.

First Published:Feb 8, 2023 1:27 PM IST