Q3FY23 Preview: Bharti Airtel: Revenue seen at Rs 357,056 million, PAT at Rs 26,502 million

6 Feb 2023 , 10:52 AM

Result date: 7^th February, 2023

Recommendation: Buy

Target price: Rs 909

 

TRAI data for October indicates a decline in VLR (active) subscribers for Bharti Airtel, probably due to inability of low-ARPU subscribers to recharge their balances amid rising inflationary pressures. Bharti added 0.8 million reported subscribers — the highest in recent months — though lost 0.96 million VLR subscribers in October. In mid-November 2022, Bharti discontinued the cheapest plan with 28-day validity (at Rs99) in two circles — Haryana and Orissa. The Rs99 plan — most popular among 2G users — offers Rs99 talktime, 165 outgoing voice minutes and 200MB over a 28-day period. Overall, revenue could grow ~20% over the year-ago quarter.

Analysts at IIFL Capital Services estimate Bharti to have added 4 million 4G subscribers in Q3 versus 5 million in Q2. They estimate 2.1% sequential mobile revenue growth in Q3. EBITDA margin expansion of ~100 basis points is largely on account of SUC savings, despite higher NW operating expenses led by accelerated network rollout.

Analysts at IIFL Capital Services expect healthy EBITDA growth to sustain. The Enterprise segment may see some normalization after a strong Q2, and DTH may remain weak, as the industry awaits NTO 2.0 implementation. Net-net, they estimate overall India EBITDA to grow 3.4% sequentially. Airtel Africa may see 1.3% sequential EBITDA growth. On revenue weighted average basis, African currencies depreciated ~1.8% sequentially versus the USD. Analysts at IIFL Capital Services estimate 3.8% sequential revenue growth, but EBITDA growth estimate is more modest at 1.3% in USD terms, considering inflationary headwinds.

At the consolidated level, analysts at IIFL Capital Services also model Rs4 billion forex loss, looking at 3.7% depreciation of the INR versus USD.

Important management insights to watch out for:

• Outlook on subscriber adds 
• Margin drivers (including tariff changes strategy)

Rs. Million	December 2022 estimates	YoY change	QoQ change
Revenue	357,056	19.6%	3.4%
EBITDA	182,429	24.1%	3.7%
Profit After Tax	26,502	219.5%	23.5%

Source: IIFL Research