Bharti Airtel shares dip 3.18% despite robust Q2 earnings; global brokerages remain bullish

Shares of Bharti Airtel, India’s second-largest telecom provider, dropped by 3.18 percent to Rs 1,610 on Tuesday, marking the seventh consecutive trading session in decline.

This comes despite the company’s solid performance in the September quarter (Q2 FY25), where Airtel reported a strong consolidated net profit of Rs 3,593 crore, surging 168 percent year-on-year, supported by steady domestic growth and solid contributions from its Africa segment.

Airtel’s quarterly revenue climbed 12 percent YoY to Rs 41,473 crore, up 7.7 percent from the previous quarter, reflecting growth across its India and Africa markets. The India segment generated Rs 31,561 crore in revenue, marking a 16.9 percent YoY increase, with gains from higher mobile segment realisations and steady growth in its Airtel Business and Homes divisions.

Mobile revenue rose 18.5 percent year-on-year, driven by recent tariff adjustments and a focus on retaining high-quality users, raising its average revenue per user (ARPU) to Rs 233, up from Rs 203 in Q2FY24 and Rs 211 in the June quarter.

Global brokerage Citi remains optimistic about Airtel’s potential, maintaining a 'buy' rating with a target price of Rs 1,950, citing the company’s lower churn rates amid tariff hikes and stronger-than-expected revenue and EBITDA results. BofA Securities projected a 77 percent YoY rise in consolidated net profit, with revenue and EBITDA growth reaching 12 and 11 percent, respectively, which Airtel surpassed. EBITDA reached Rs 22,021 crore, with margins expanding to 53.1 percent, as per the company's Q2 report.

Airtel added 26.2 million new smartphone data users and 0.8 million postpaid users this quarter, positioning it well against competitors, including Reliance Jio, whose ARPU rose to Rs 195.1 from Rs 181.7 in Q1FY25. Additionally, Airtel’s customer base reached 563 million, including 407 million users in India and 157 million in Africa.

While Airtel shares have gained 58 percent since the start of CY24, reaching a high of Rs 1,631, current market conditions are pressuring the stock. However, its continued growth and strategic 5G expansion fuel bullish sentiment among analysts, despite recent share price dips.