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Telecom giant Bharti Airtel will be in the focus during this week’s trading session due to its second-quarter performance for FY23. Airtel shares ended on a broadly flat note on exchanges last week ahead of its Q2. In the July to September 2022 quarter, Airtel is expected to record another triple-digit growth in percentage terms in its profitability. The company’s revenue is likely to stay robust with currency tailwind aiding performance in African business. ARPU is expected to rise further, while the customer base may see a modest addition. Overall, EBITDA margins may improve further.
On October 28, Airtel shares closed at ₹816.80 apiece on BSE flat compared to the previous closing. Its market cap is over ₹4.54 lakh crore.
Airtel witnessed a strong quarter in the period ending June 30, 2022, with profitability skyrocketing with triple-digit growth in percentage terms.
In the first quarter of FY23, Bharti Airtel posted a whopping 465.81% growth in consolidated net profit to ₹1,606.9 crore as compared to a profit of ₹284 crore in the same period last year. Revenue from operations stood at ₹32,805 crore in Q1FY23 which rose by 22% from ₹26,854 crore a year-ago period. EBITDA stood at ₹16,604 crore, while EBITDA margins came in at 50.6%.
During Q1FY23, Airtel’s average revenue per user (ARPU) increased to ₹183 from ₹146 in Q1FY22. Airtel stated that its 4G customers grew by 20.8 million YoY and 4.5 million QoQ, which is 63% of the overall customer base.
What to expect from Bharti Airtel in Q2FY23?
In their Q2 preview report, ICICI Direct analysts on Bharti Airtel said, “Reported ARPU is likely to be up 2% QoQ at ₹187 with the benefit of subscriber mix and higher number of days during the quarter. We expect modest addition of 2 mn subs. Indian wireless revenues are expected to see 2.5% QoQ growth at ₹18,621 crore. India non-wireless revenues traction are expected to remain robust especially broadband and enterprise.”
ICICI Direct analysts expect the company’s Africa business to likely witness revenue growth of 3.6% QoQ to ₹10,052 crore, aided by currency tailwind.
Further, the report said, ” Consolidated reported revenues are expected to be up 3.1% QoQ at ₹33,815 crore. We expect India EBITDA margins at 51.9%, up 80 bps QoQ, aided by partial benefit of lower SUC. Overall consolidated margins are expected at 50.9%, up 50 bps QoQ. We expect PAT at ₹2,358 crore.”
Thereby, ICICI Direct expects Bharti Airtel to report a revenue of ₹33,815.2 crore up by 19.4% yoy and 3.1% qoq. While EBITDA is factored around ₹17,201.1 crore higher by 24.6% yoy and 4.1% qoq. PAT is seen at ₹2,358.1 crore — rising by 108% yoy and 46.8% qoq in Q2FY23.
Among key monitorable during Q2 would be the company’s commentary on ARPU trajectory and non-wireless business.
Meanwhile, Emkay Global in its preview report said, “Bharti’s ARPU should grow by 1% QoQ to Rs185, with weak seasonality being offset by better mix and 1 additional day. Overall subscriber and data subscriber addition should be similar to Q1 at 2mn and 4.5mn respectively. Non-mobility segments – Homes and Enterprise – should continue reporting steady growth of 5% and 3% QoQ, respectively, while DTH is likely to decline QoQ by another 0.4%.”
“Airtel Africa should see steady growth of 3.5%, with INR depreciation vs the USD benefiting conversion. A few African currencies seeing devaluation could impact revenues in CC terms,” Emkay’s note added.
Moreover, for Q2FY23, Prabhudas Lilladher has factored subscriber growth of 2 mn (Q1: 1.3 mn) to 329.31mn, coupled with an ARPU increase of 2.6% QoQ to ₹188. In their note, the brokerage said, “Airtel Africa business is expected to see revenue growth of 7.5%QoQ, while we have factored in 4.5% QoQ revenue growth for the enterprise segment and 50bps EBIDTA margin improvement.”
Also, Prabhudas Lilladher’s note added, “Home services segment will see revenue growth of 5.6%QoQ with flat margins. For DTH we have factored flat profitability trend in Q2.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
