Q1FY24 Preview: Bharti Airtel: Revenue seen at Rs. 367,430 million, PAT at Rs. 29,548 million

1 Aug 2023 , 11:41 AM

Result date: 3^rd August, 2023

Recommendation: Buy

Target price: Rs. 919

Bharti Airtel (Bharti) witnessed healthy 4G subscriber additions in recent months and stands to benefit from the first full quarter of flow through of entry-level tariff hikes during the June 2023 quarter. The company added 0.08 million / 0.73 million reported/VLR subscribers, respectively. Reported subscriber adds for Bharti were the lowest in many months. Bharti raised its entry-level prices by ~56% pan-India, in a staggered manner between November 2022 and March 2023. While Q4 saw partial benefit from the same, Q1 will see the full flow-through of the tariff hike.

Analysts at IIFL Capital Services estimate Bharti to have added 7 million 4G subscribers in Q1 versus 7.4 million in Q4. One extra day in Q1 will aid sequential growth. In addition to entry-level tariff hike flow-through, these factors should drive 3.3% sequential mobile revenue growth in Q1, believe analysts at IIFL Capital Services. An increase in NW opex may limit EBITDA growth to 2.3%.

Nigeria, which contributes 40% to Airtel Africa’s revenue, saw ~42% currency depreciation versus the USD after the country let Naira float as opposed to a currency peg earlier. This was effective from June 15. In its filing, Airtel Africa stated that every 1% depreciation of Naira versus the USD would result in US$22 million/US$12 million annualized revenue/EBITDA hit. This suggests ~US$20 million EBITDA hit in Q1 (considering 15 days of sharply lower exchange rate).

On revenue weighted average basis, African currencies depreciated by ~6% sequentially versus USD, with currencies such as Congolese Franc and Kenyan Shilling depreciating in high-single digits. In USD terms, analysts at IIFL Capital Services estimate 1.1%/2.7% sequential revenue/EBITDA growth.

Bharti’s Profit After Tax (PAT) could dip 1.7% on a sequential basis.

Rs. Million	June 2023 estimates	YoY change	QoQ change
Revenue	367,430	12.0%	2.0%
EBITDA	188,331	13.9%	0.7%
EBITDA margin (%)	51.3%	87 bps	(67) bps
Profit After Tax	29,548	83.9%	(1.7)%

Source: IIFL Research