Bharti Airtel slips 3% despite over 91% YoY surge in December net

Shares of Bharti Airtel dipped 3 per cent to Rs 765.05 on the BSE in Wednesday’s intra-day trade, despite the company reporting a 91.5 per cent year-on-year (YoY) surge in consolidated net profit to Rs 1,588 crore for the October-December quarter of 2022-23 (Q3FY23) led by revenue growth and 4G customer addition.

In the same quarter last year, Airtel posted a net profit of Rs 830 crore. Net profit was, however, lower on a sequential basis due to higher operating expenses and licence fee-related provision of Rs 669 crore.

The stock of telecom operator traded lower for third straight day, and was down 4 per cent during the period. However, at 11:37 AM; the stock erases partial intra-day losses and was down less than 1 per cent at Rs 778, as compared to 0.70 per cent rise in the S&P BSE Sensex. The trading volumes at the counter doubled, with a combined around 5.7 million shares changing hands on the NSE and BSE.

In Q3FY23, Bharti Airtel’s total revenue rose nearly 20 per cent YoY to Rs 35,804 crore "backed by strong and consistent performance delivery across the portfolio", the company said in a statement. 

The average revenue per user (ARPU) grew 1.5 per cent sequentially and 18.4 per cent YoY to Rs 193. At the operating level, the company registered 24.8 per cent YoY growth in profit to Rs 18,601 crore, while the operating margin widened 2.1 percentage points to 52 per cent. READ MORE

According to ICICI Securities, Airtel continues to report a healthy performance on Indian wireless business front with resilient and industry leading KPIs in terms of India post-paid/4G subscribers, ARPUs and margins. Management commentary on overall growth drivers would be the key monitorable ahead, the brokerage firm said in a note. “We remain constructive on Airtel given the disproportionate benefits of market consolidation in telecom sector,” ICICI Securities said.

In past three months, Bharti Airtel has underperformed the market by falling 6 per cent, as compared to 1 per cent decline in the S&P BSE Sensex. However, in past six months, the stock rallied 10 per cent, as against 3 per cent gain in the benchmark index.  It corrected 13 per cent from its record high level of Rs 877, touched on November 25, 2022.

Airtel is yet to collect 75 per cent proceeds of its Rs 21,000 crore rights issue, which was completed in October 2021. As per the terms, the remaining 75 per cent is to be called for within a period of three years in two tranches. Analysts at BNP Paribas believe one of the tranches could be collected in 2023 and this should help strengthen the balance sheet, the brokerage firm said.

For CY23, BNP Paribas expect double-digit revenue growth to continue for the industry, with the consolidation trend continuing. Analysts believe operators would raise tariffs for 4G services and also look to lift ARPU from 5G subscribers by offering them a larger data quota at a lower cost/GB. Airtel appears well positioned to benefit from this, in our view, the brokerage firm said.

“Airtel’s Payments Bank is already profitable. We expect increased efforts from operators to showcase and monetise their digital services. We also expect increased efforts to roll out 5G with enterprises and corporate customers,” BNP Paribas said.

Technical View

Bias: Negative

Target: Rs 752

Support: Rs 773

Resistance: Rs 790

The stock has been trading with a negative bias since the end of calendar year 2022, and had declined around 11.5 per cent till mid-January from its high of Rs 853 in early December. 

Post that, the stock consolidated and attempted a pullback in early February. In the last four trading sessions, the stock is seen holding above its 20-DMA (Daily Moving Average) after a gap of more than a month.

The 20-DMA at Rs 773 is the immediate support for the stock. As long as the stock holds above the same, the stock can potentially rally towards Rs 790, which is the higher-end of the Bollinger Bands on the daily chart. On the flip side, failure to hold above Rs 773 can trigger a fall to Rs 752.

Among the key momentum oscillators, the DI (Directional Index) and the Slow Stochastic are in favour of the bears, while the MACD (Moving Averages Convergence-Divergence) is marginally positive.

(With inputs from Rex Cano)