Bharti’s Q1 revenues (up 21% y-o-y), Ebitda (up 31% y-o-y) and profit of Rs 2.8 bn, all beat our estimates led by sturdy income development in India non-mobile and Africa. Mobile Arpu, up 1% q-o-q, was supported by healthier 4G and postpaid adds. We raise our consolidated estimates by 2-3% to element in the beat and count on 20% Ebitda CAGR more than FY21-24. At 7.4x FY23E EV/Ebitda danger-reward appears favourable. We keep Buy with rolled-more than PT of Rs 685/sh.
Q1 outcomes an all round beat: Bharti Airtel’s Q1FY22 consolidated revenues, up 15% y-o-y (21% y-o-y on like to like basis), consolidated Ebitda, up 31% y-o-y, and income at Rs 2.8 bn, all beat our estimates. Higher than anticipated revenues led by sturdy development in India-non-mobile enterprise and Africa drove the beat.
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India mobile–revenue miss but margins surprise positively: Bharti’s India mobile revenues have been up 11% y-o-y (22% on like-to-like basis), missed estimates. ARPUs at Rs 146, have been up 1% q-o-q, largely in line with estimates having said that flat subscriber base due to larger than anticipated churn amongst prepaid voice subscribers disappointed. Bharti’s subscriber additions in 4G (+5m) and postpaid (+.3m) was encouraging. Bharti’s information visitors development remained healthier at 49% y-o-y. To assistance this development, Bharti added 55k broadband base stations in Q1, its highest in more than 5 years. Despite such investments, network charges have been reduce and helped drive 170bps q-o-q expansion in margins to 49%, ahead of estimates. We count on network charges to return to development in subsequent quarters.
Strong functionality in non-mobile and Africa: Indian non-mobile firms had a sturdy quarter with all 3 segments developing 8-13% y-o-y, beating estimates. Homes segment delivered subscriber additions of .28m, its highest in a quarter led by scale-up of LCO tie-ups having said that its margins fell 620bps q-o-q due to regulatory alter. Africa revenues (up 7.7% q-o-qcc) have been ahead of estimates led by sturdy subscriber additions and larger than anticipated ARPU. Africa Ebitda (up 8.6% q-o-qcc) was also ahead of estimates.
FCF falls q-o-q comfy leverage: During Q1FY22, Bharti Airtel FCF rose to Rs 29 bn vs damaging Rs 19 bn FCF in Q4FY21, as FCF in Q4 was impacted by Rs 63 bn of upfront spectrum payment. Adjusted for that, FCF fell 36% q-o-q, due to larger money interest payments and no dividend from Indus Towers. Consolidated net debt grew by 6% q-o-q due to Rs 106 bn addition to spectrum liabilities, but leverage was comfy at 3.0x Ebitda.
Maintain Invest in: We raise our consolidated income and Ebitda estimates by 2-3% as we raise estimates for India non-mobile and Africa segments. Over FY21-24, we now count on Bharti Airtel to provide 14% CAGR in revenues and 20% CAGR in Ebitda assuming 7% tariff hikes in Q4FY22 and Q4FY23. We keep Buy.