Bharti Airtel share price gains 4% post Q3 results. Do you own it?

Stock Market Today: Bharti Airtel share price gained close to 4% in the morning trade on Friday, February 7 following the Q3 results announcement.

Bharti Airtel Q3 Results

Bharti Airtel helped by a one-time gain from Indus Towers becoming its subsidiary in November, recorded a huge profit beat, with a net profit of ₹14,760 crore for the quarter ended December 2024, up 483% from ₹2,530 crore a year earlier.

A net extraordinary gain of ₹9,267 crore was recorded by the firm, comprising ₹14,322.5 crore from the consolidation of Indus, ₹128.5 crore from the reversal of the provision generated for an input tax credit on passive infrastructure services, and ₹1,193.6 crore in foreign exchange gains. Regulatory levies of ₹6,358.6 crore and an impairment charge of ₹1,740.4 crore on intangible assets negated the exemption gain.

Earnings before interest, tax, depreciation, and amortisation (Ebitda) increased by 24% to ₹24,880 crore in the third quarter that ended in December, while consolidated revenue for the quarter was ₹45,129 crore, up 19% year over year. The EBITDA margin increased from 52.9% to 55.1% in the previous year.

Analysts Views

Analysts generally have maintained a positive view on Bharti Airtel looking at its rising average revenues per user (ARPU). The ARPU for the quarter ended December 2024 reported by Bharti Airtel stood at ₹245 as compared to ₹208 in Q3FY24.

As per analysts at JM Financial Institutional Securities, Bharti Airtel remains its high conviction BUY stock, with a one-year target price of ₹1,850 and a three-year target price of ₹2,400 (implying a 14% IRR).

JM Financial says that given the attractive long growth runway, they see Bharti delivering a three-year IRR of 14% based on our unchanged three-year target price of ₹2,400, implying 9.0 times FY29 EV/EBITDA (enterprise value to Ebitda) and 22.8 time FY29 Price to earnings ratio.

They believe India wireless business tariff hikes are likely to be more frequent, going forward, given the consolidated industry structure and higher ARPU requirement for Jio also to justify significant 5G capex and given Jio’s potential IPO.

Bharti is the biggest beneficiary of higher tariffs as per JM Financial given the sticky and premium quality of its subsidiaries. "ARPU growth aided by likely moderation in capex will drive Bharti’s Free Cash Flow growth from FY25, enabling it to get to net cash by FY29 (versus. net debt excluding lease liability of ₹1,33700 crore at end-3QFY25), JM Financial said, adding that this will also aid in accretion in equity value.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.