Bharti Airtel stock slips for 7th straight session, down 3% after Q2 results. What should investors do now?

Bharti Airtel, India's second-largest telecom provider, witnessed its shares decline for the seventh consecutive trading session on Tuesday, October 29. The stock dropped 3.18% to ₹1,610 apiece despite Airtel's strong performance in the September quarter (Q2 FY25).

Following the Q2 results, global brokerage firm Citi maintained its 'buy' recommendation on the stock with a target price of ₹1,950. Airtel's revenue and EBITDA exceeded Citi’s estimates, driven by limited subscriber churn despite recent tariff hikes.

BofA Securities had projected Airtel’s consolidated net profit to rise by 77% YoY, with revenue increasing by 12%, EBITDA by 11%, and margins reaching 52.2%. The company surpassed all these estimates.

The telecom major, on Monday, reported a consolidated net profit of ₹3,593 crore in Q2FY25, a YoY surge of 168%, powered by robust momentum in the domestic market and steady, constant currency growth in Africa.

Consolidated quarterly revenue stood at ₹41,473 crore, up 12% YoY and 7.7% QoQ, spurred by a strong India segment performance and consistent growth in Africa. Airtel’s India business achieved quarterly revenue of ₹31,561 crore, reflecting a 16.9% YoY increase and an 8.7% sequential rise, supported by improved realisations in its mobile segment and sustained momentum in its Homes and Airtel Business divisions.

Mobile revenues rose 18.5% YoY, underpinned by tariff adjustments and a continued focus on premiumising its customer base with quality users. Airtel’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) climbed 12% to ₹22,021 crore, with EBITDA margins rising to 53.1% from 52.7% last year, as per the company's Q2FY25 earnings report. 

During the quarter, Airtel added 26.2 million smartphone data users and 0.8 million postpaid users, raising ARPU, a key profitability metric, to ₹233 compared to ₹203 in the prior year quarter and ₹211 in the June quarter.

By comparison, Reliance Jio’s ARPU rose to ₹195.1 from ₹181.7 in the June quarter. Alongside its competitors, Airtel implemented a 10-21% tariff increase in June this year, marking its third tariff hike since 2019.

"We continue to deliver industry-leading ARPU growth. ARPU for the quarter stood at ₹233 as compared to ₹203 in Q2FY24," the company said in its Q2FY25 earnings report.

Airtel, along with other private telcos, had raised tariffs by 10-21% in June this year, the third such hike since 2019. In India, mobile data consumption rose 22.6%, with an average monthly usage of 23.9 GB per customer. Airtel’s total customer base reached 563 million, with India contributing 407 million users and Africa accounting for 157 million.

Biggest yearly jump since CY19

The company’s shares have surged sharply in CY24, driven by its robust position in the telecom sector, rapid 5G expansion, and strategic investments in digital and network infrastructure.

Starting the year at ₹1,031.95 per share and rising to the current level of ₹1,631, resulting in a gain of 58%. This gain marks the biggest yearly gain for the stock since CY 2019 and also represents the sixth consecutive year of positive performance for the stock.

This year’s strong performance has further fueled the company’s market capitalisation, pushing it past the ₹10 lakh crore mark.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.