Q2FY23 Preview: Bharti Airtel: Revenue seen at Rs339,089 million, PAT at Rs21,244 million

30 Oct 2022 , 08:28 AM

Result date: 31^st October, 2022
Recommendation: Buy
Target price: Rs865

Bharti Airtel is likely to post a good set of numbers for the September 2022 quarter. Analysts at IIFL Capital Services estimate the company added 6.5 million 4G subscribers in Q2 versus 4.5 million in Q1. Consolidated revenue growth could come in at 3% sequentially and ~20% over the year-ago quarter.

The company’s EBITDA margin could expand by over 100 basis points over the year-ago quarter amid SUC savings, despite higher NW operating expenses led by accelerated network rollout. Inflationary pressures in Nigeria could impact EBITDA growth on a sequential basis.
Bharti’s home BB and enterprise segments should sustain their healthy momentum.

Analysts at IIFL Capital Services estimate 3.5% sequential decline in EBITDA (in USD terms) for Airtel Africa on account of depreciation of local currencies and inflationary pressure in Nigeria. They also factor in higher fuel price in Nigeria, which has almost jumped 2.5 times in the past six months. At the consolidated level, Bharti could post forex loss of Rs5.5 billion, similar to Q1, considering the 3% sequential depreciation of the INR versus USD in both Q1 and Q2.

The company’s consolidated Profit After Tax (PAT) could grow 32.2% sequentially and 87.3% over the year-ago quarter.

Important management insights to watch out for:

• Outlook on subscriber adds, ARPUs across markets and segments
• Pricing action, margin drivers

Rs. Million	September 2022 estimates	QoQ change	YoY change
Subscribers (India)	329.1	0.5%	1.7%
Revenue	339,089	3.4%	19.7%
EBITDA	169,915	2.8%	23.0%
EBITDA margin	50.1%	(28) bps	135 bps
Profit After Tax	21,244	32.2%	87.3%

Source: IIFL Research