Bharti Airtel Shares Post Significant Quarterly Gain Amid Positive Brokerage Outlook
Bharti Airtel Shares Rise 3% Amid Positive Earnings and Share Swap Deal
Shares of Bharti Airtel rose over 3% on May 14, a day after the company announced its March quarter earnings. Despite reporting a lower-than-expected bottom line for the March quarter, due to a one-time charge on account of regulatory and government levies, brokerages remain largely positive on the stock given the company's strong fundamentals.
The company's consolidated net profit for the reporting quarter rose over 10% sequentially but fell 33.5% on year to Rs 7,325 crore, missing CNBC-TV18's expectation of Rs 7,404 crore. However, excluding the one-time charge, the company's consolidated net profit for the reporting quarter was Rs 10,486 crore, not accounting for the change in tax.
| Quarter | Consolidated Revenue (Rs crore) | Consolidated Net Profit (Rs crore) |
|---|---|---|
| March 2024 | 55,383 | 7,325 |
| March 2023 | 47,500 | 10,980 |
The company's consolidated revenue for the quarter rose 2.6% sequentially and around 16% on year to Rs 55,383 crore. The revenue growth in the March quarter was driven by sustained growth in India and robust performance in Africa. In a share-swap deal, Bharti Airtel will issue shares worth Rs 28,200 crore to Indian Continent Investment in exchange for a 16.31% stake in Airtel Africa plc. As part of this deal, the company will issue 146.8 million shares to Indian Continent Investment at Rs 1,923 apiece, a premium of more than 7% to Wednesday's closing price.
Global brokerages remain positive on the stock. Jefferies raised its target price on Bharti Airtel to Rs 2,350 while maintaining its "buy" call on the stock. Jefferies expects the company's robust free cash flow generation to support higher shareholder payouts. Morgan Stanley and JPMorgan maintained their "overweight" call on the stock with a target price of Rs 2,450 and Rs 2,300, respectively. Macquarie also maintained its "outperform" rating on the stock with a target price of Rs 2,220.
The telecom company's strong fundamentals and the share swap deal have strengthened the investment case. The company's robust free cash flow generation and sustained growth in India and Africa are expected to support higher shareholder payouts. The proposed share swap for Airtel Africa is on better than expected terms and may lower concerns on future stake sales by Singtel.
Investor Takeaway
Investors should consider the positive brokerage outlook and strong fundamentals of Bharti Airtel despite a lower-than-expected bottom line.
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