Brokerages Cheer Bharti Airtel’s Q1 Print as Profits Rise, ARPU Moves Up

Bharti Airtel’s June quarter results have struck the right chord with analysts, as a mix of solid earnings, conscious capex and growing average revenue per user metrics keeps the Street standing in favour of the telecom major.

Shares of Bharti Airtel reacted positively to the developments and rose over 1% on August 6.

For the June quarter, the telecom major reported a 43% jump in consolidated net profit to ₹5,948 crore, marking its fifth consecutive quarter of profit growth. Revenue from operations rose 28% year-on-year to ₹49,463 crore, buoyed by a steady uptick in both mobile and broadband segments.

Brokerages have responded with bullishness, driven by Bharti Airtel’s core performance that continued to tick all the right boxes: profitability, prudent capital allocation and user monetisation.

Morgan Stanley maintained its ‘equal weight’ rating with a target price of ₹1,890, highlighting the India business’ beat on the Ebidta front. The brokerage pointed out that capital expenditure, at ₹5,450 crore, came in below expectations, helping to ease pressure on consolidated net debt. More importantly, the lower capex signalled growing confidence around the company’s free cash flow generation, the brokerage stated.

CLSA also retained its ‘outperform’ stance and raised its target price to ₹2,035. The firm highlighted Bharti Airtel’s leadership on the average revenue per user (ARPU) front, which stood at ₹250 during the quarter, a key metric that reflects pricing power in the telecom sector.

Subscriber growth remained strong, particularly in the Homes segment, which recorded its highest-ever net additions of 939,000 users. Airtel’s home broadband base has now touched 11 million, supported by the rollout of 1.6 million new home-pass fibre connections.

On similar grounds, Macquarie also echoed an upbeat view, keeping its ‘outperform’ rating with a target of ₹2,050. Macquarie pointed to solid execution in the India mobile business, stating that both ARPU and free cash flow were tracking ahead of forecasts. “Record free cash flow generation in particular will likely drive positive sentiment as the Street was mixed on capex trajectory and FCF delivery,” Macquarie wrote in a note.

Meanwhile, Bharti Airtel’s smartphone user base grew by 21.3-mn on a year-on-year basis and by 3.9-mn sequentially, now accounting for 77% of its mobile subscribers. The company added 0.7 million postpaid users, taking the total to 26.6-mn. Monthly mobile data usage per user reached 26.9 GB, up 21.6% year-on-year, another signal that consumption remains on an upward trend.

To push for stronger growth, Bharti Airtel added around 1,800 towers and 7,500 broadband sites in the June quarter. Over the past year, it has installed nearly 15,400 towers and 43,700 km of fibre, sticking to a network investment cycle that has begun yielding operating leverage.