Geojit Financial Services has reiterated its BUY rating for Bharti Airtel Ltd., increasing the target price to Rs 1,711. The telecommunications leader demonstrated robust performance in Q2FY25, with a 12% YoY revenue growth to Rs 41,473 crore, driven by a strong Indian market and stable performance in Africa. Key metrics like ARPU and EBITDA remain solid, supported by tariff hikes and premiumization. Bharti Airtel’s strategic expansion in mobile broadband, enhanced network connectivity, and AI-driven customer engagement initiatives position it for sustained growth, offering a 12% upside from the current market price.

Financial Highlights for Q2FY25

Revenue Growth:

Consolidated revenue increased by 12% YoY to Rs 41,473 crore, aided by strong domestic and international contributions.
India revenue rose to Rs 31,561 crore, up 16.9% YoY, driven by mobile services and premium customer acquisitions.
Profitability:

Reported PAT surged by 98.4% YoY to Rs 4,153 crore, reflecting higher topline performance and a reduction in exceptional items.
EBITDA grew 12% YoY to Rs 21,846 crore, with margins steady at 52.7%.
ARPU (Average Revenue Per User):

ARPU improved to Rs 233 from Rs 203 in Q2FY24, supported by a tariff hike and a higher proportion of quality customers.
Customer Base:

Total subscriber base expanded by 4.3% YoY to 563 million, with 407 million in India and 157 million in Africa.

Key Business Drivers

Mobile Services Growth:

India mobile revenue grew 18.5% YoY, supported by tariff hikes and premium customer additions.
Mobile data consumption per user increased by 22.6% YoY, with average usage reaching 23.9 GB per month.
Airtel Business and Home Services:

Airtel Business revenue grew 10.7% YoY to Rs 5,656 crore, driven by enterprise solutions.
Home broadband services rose 17.3% YoY to Rs 1,432 crore, benefiting from increased demand for high-speed internet.
Digital and AI Initiatives:

Adoption of AI technology to enhance customer service is expected to improve retention and attract new users.

Capex and Operational Highlights

Network Expansion:

Airtel added ~5,000 towers and 15,200 mobile broadband stations during the quarter to strengthen connectivity.
Enhanced 5G rollouts and increased coverage in urban and rural areas remain a priority.
Debt Management:

Prepayment of Rs 32,000 crore in high-cost spectrum dues over the past five quarters has reduced India’s net debt-to-EBITDA to 2.6x from 3.1x YoY.
Capex Allocation:

Consolidated capex stood at Rs 7,675 crore, with Rs 6,260 crore invested in India and Rs 1,415 crore in Africa.

Growth Outlook and Projections

Revenue and EBITDA Projections:

FY25E revenue is forecasted at Rs 1,69,105 crore, a 12.8% YoY growth.
EBITDA margins are expected to improve to 52.8%, reflecting operational efficiencies and increased ARPU.
PAT and EPS:

PAT is projected to grow by 34.3% in FY25E to Rs 20,199 crore, with an EPS of Rs 33.2.
Network Expansion Plans:

Continued focus on deploying advanced technologies and expanding 5G infrastructure will drive future growth.

Valuation and Target Price

Valuation Multiples:

Bharti Airtel trades at a P/E of 46x FY25E EPS and EV/EBITDA of 12.9x FY25E.
ROE is expected to rise significantly from 9.1% in FY24 to 20.9% in FY25E.
Target Price:

The revised target price of Rs 1,711 is based on SOTP (Sum of the Parts) valuation, reflecting a 12% upside.

Key Risks

Regulatory Changes:
Policy shifts in telecom pricing or spectrum allocation could impact growth.
Competitive Intensity:
Pricing wars with competitors like Reliance Jio and Vodafone Idea may affect profitability.
Global Volatility:
Currency fluctuations and macroeconomic uncertainties in Africa may weigh on financials.

Future Performance for Bharti Airtel

Bharti Airtel’s robust performance in Q2FY25 and its strategic initiatives underline its resilience and growth potential in a competitive telecom market. Strong ARPU growth, expanding customer base, and network advancements position the company for sustained success. Geojit Financial Services maintains its BUY rating, with a target price of Rs 1,711, offering an attractive medium-term investment opportunity.