On Wednesday, ICICI Securities revised its stance on Bharti Airtel Ltd (BHARTI:IN), downgrading the stock from 'Buy' to 'Add' but concurrently increasing the price target to INR1,575 from INR1,500. The adjustment reflects a nuanced view of the company's financial performance and market position following its recent earnings report.
Bharti Airtel's performance in India showed a robust 10.2% year-over-year (YoY) growth in EBITDA, with its mobile services EBITDA climbing 12.2% YoY. This uptick occurred despite the company incurring some expenses related to the rollout of 5G services.
However, the non-mobile segment's EBITDA growth slowed to 3.4% YoY in the first quarter of the fiscal year 2025. Despite this deceleration, the company expressed optimism about the sector's growth prospects.
Comparatively, Bharti Airtel's EBITDA growth stands close to that of its competitor, RJio, which reported a 10.7% YoY increase. Bharti Airtel has demonstrated consistent revenue growth in its mobile services, which is indicative of its strong execution capabilities and its success in expanding its market share.
The company's performance following two recent tariff hikes has been notable, with a higher incremental market share gain, a trend that stakeholders will watch in the next three quarters.
The financial report also highlighted Bharti Airtel's free cash flow (FCF) generation of INR 59 billion. This figure is particularly significant after the company made a substantial prepayment of INR 79 billion for spectrum dues.
Additionally, Bharti Airtel's leverage ratio has been improving quarter-over-quarter. The report indicates that the company plans to use its excess capital to deleverage its balance sheet further and for dividend payouts, aiming to enhance shareholder value.
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