Q2FY24 Preview: Bharti Airtel: Revenue seen at Rs. 369,551 million, PAT at Rs. 32,501 million

30 Oct 2023 , 11:20 AM

Result date: October 31, 2023

Recommendation: Buy 

Target price: Rs. 967

Analysts at IIFL Capital Services believe that with modest revenue growth and 5G rollout costs, telecom companies are likely to witness a stable performance in the September 2023 quarter. They expect Naira depreciation to be a drag on Bharti Airtel’s performance during the quarter. They estimate 3% sequential growth in mobile revenue of the company. An extra day in the quarter will also aid sequential revenue growth of telecom companies. 

In the international revenue, Bharti Airtel may see some moderation; while the flow-through of entry-level tariff hikes was already in the bag for the June 2023 quarter. Nigeria, which contributes 40% to Airtel Africa’s revenue, has seen 40%+ currency depreciation versus the USD, after the country let the Naira float. In its filing, Airtel Africa stated that every 1% depreciation of Naira versus the USD would result in US$22mn/US$12mn annualized revenue/EBITDA hit. Analysts at IIFL Capital Services estimate US$115mn incremental sequential hit for the September 2023 quarter. Consequently, they estimate 12%/15% sequential revenue/EBITDA decline for Airtel Africa in USD terms.

Bharti Airtel is estimated to have added 8 million 4G subscribers in the September 2023 quarter versus 5.6 million subscribers in the June 2023 quarter. There will be no incremental benefit from entry-level tariff hike, since all the benefits have already accrued in the June 2023 quarter. Increase in NW opex may limit EBITDA growth to 1.8%.

Enterprise segment benefited from 6% sequential revenue growth in the June 2023 quarter, as Bharti let go of a lower-margin contract. Analysts at IIFL Capital Services expect the performance to normalize in Q2. DTH is likely to see a muted quarter, given that June 2023 quarter would have benefited from IPL. Overall India EBITDA could grow 2% sequentially. Bharti Airtel may see some moderation in international roaming revenue (September quarter is a lean season for international travel).

Profit After Tax (PAT) could register strong growth both sequentially as well as over the year-ago quarter.

Important management insights to watch out for:

• Growth outlook across all business segments, markets 
• Outlook on margins

Rs. Million	September 2023 estimates	YoY change	QoQ change
Revenue	369,551	7.0%	(1.3)%
EBITDA	190,843	8.5%	(2.6)%
EBIT	94,431	9.2%	(5.0)%
Profit After Tax	32,501	51.5%	101.6%

Source: IIFL Research