BackBharti Airtel shares close nearly 8% higher despite weak Q4 results
Bharti Airtel's Q4 net profit decline of 72% and revenue sliding 12% year-on-year left analysts worried
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Mumbai: Shares of Bharti Airtel jumped 8.58% intraday on Wednesday despite posting weak March quarter results. The telecom company’s Q4 net profit decline of 72% and revenue sliding 12% year-on-year left analysts worried.
The Bharti Airtel shares closed up 7.87% at Rs372.70 on Wednesday a day after announcing the March quarter results.
Ambit Capital Pvt. Ltd expects sustenance of weak revenue growth and persistently high capital intensity.
In a report on 10 May, it said that Bharti’s net profit declined due to higher depreciation expenses (up 3% year-on-year) and finance cost (up 15% year-on-year).
Net profit of Bharti Airtel skid to Rs373.4 crore in Q4FY17 from Rs1,319.2 crore, while revenue fell to Rs21,934.6 crore from the year-ago period.
The brokerage firm added that Bharti’s management commentary was centred on predatory pricing by Reliance Jio that resulted in a decline in telecom revenue for the first time on a full-year basis. “Free cash flow improved as capex moderated across businesses. We expect competitive headwinds to result in continuation of weak revenue and profitability trends for the Indian business," Ambit Capital said.
It said that Bharti’s operating performance will remain weak, driven by competitive pressures. “We expect persistence of double-whammy; muted revenue growth and rising capital intensity for the telecom sector," Ambit Capital added.
Meanwhile, global brokerage firm CLSA said that Bharti’s sharp pick-up in data traffic was encouraging. Lowering its FY18-19 consolidated revenue and Ebitda (earnings before interest, tax, depreciation and amortization) estimates by 2% and 5%, respectively, CLSA said it is concerned about sharper-than-expected drop in Indian average revenue per user. In the March quarter, Bharti’s average monthly revenue per user fell sharply to Rs158 from Rs194 in the corresponding quarter last fiscal.
However, its African business reported profit for first time, posting profit before tax (PBT) of $33 million in full year FY17 compared to a loss of $159 million in the year-ago period.
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