On Tuesday, Bharti Airtel Ltd (BHARTI:IN) stock retained its Outperform rating and a price target of INR1,540.00, as CLSA reaffirmed its stance on the telecom giant.
The company's first-quarter financial results for fiscal year 2025 showed a modest quarter-over-quarter revenue increase of 2%, reaching Rs385 billion, with Ebitda (earnings before interest, taxes, depreciation, and amortization) also rising slightly by 1% to 3% year-over-year to Rs197 billion. This muted growth was attributed to the impact of currency devaluation in its Africa operations.
In contrast, Bharti Airtel's India mobile segment demonstrated stronger performance, with revenue and Ebitda climbing by 2% to 3% quarter-over-quarter and a notable 10% to 12% year-over-year.
The company's 4G and 5G data subscriber base expanded significantly, adding 6.7 million users quarter-over-quarter and 29.7 million year-over-year. Additionally, the average revenue per user (Arpu) in India saw a 1% quarterly increase to Rs211, which stands 16% higher compared to competitor RJio's Rs182.
Bharti Airtel also reported a robust free cash flow of Rs119 billion (approximately US$1.4 billion) after capital expenditures for the first quarter of fiscal year 2025. The company's gearing ratio, a measure of financial leverage, was reported at a comfortable 2.5 times.
In a strategic financial move, Bharti Airtel prepaid Rs79 billion (around US$1 billion) in spectrum liabilities. The board also chose to defer calling the balance amount on a partly paid-up share, citing the company's strong cash flow and moderated capital expenditure as reasons for the decision.
The telecom provider's financial health and strategic decisions have led CLSA to maintain its Outperform rating and a sum-of-the-parts (SOTP) based target price of Rs1,540. This reaffirmation of the positive outlook reflects confidence in Bharti Airtel's market position and financial stability.
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