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Emkay Global
Bharti Airtel (Buy)
Target: ₹686
CMP: ₹520.70
Bharti reported in-line EBITDA, but ARPU (average revenue per user) of ₹145 missed our estimate by nearly 1.8 per cent (adjusted for IUC and lesser number of days in Q4). This indicates a deceleration in the mix improvement-led ARPU uptick that has been seen over the last two quarters.
Data subscriber addition momentum sustained with 13.9 million additions, boosting data subs base to 58.7 per cent (52.4 per cent in FY20). Healthy performance of enterprise and home broadband segments continued, with the latter seeing the highest customer additions, yet again.
Market share gains across the business segments reflect the strength of the underlying customer winning strategy. FY22 capex is expected to be similar to that of FY21, while the composition of it will change with spends on transport capex (ahead of 5G launch).
We keep our estimates largely unchanged. We expect a tariff hike in H2-FY22. This is crucial for fast-paced balance sheet deleveraging, in turn, driving next leg of re-rating for the stock. We maintain Buy with a SoTP-based target price of ₹686.
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