Bharti Airtel shares slip after Q2 miss. Should you buy, sell or hold?

Revenue, however, rose more than 22% to ₹34,526 crore, boosted by 4G customer additions. Sequentially, revenue rose 5.2% from ₹32,804 crore.

“With two months left in 3QFY23 and upcoming state elections, tariff hikes are more likely to take place in 4Q. Also, network costs as well as SG&A costs are likely to rise faster amidst 5G rollout and launch. We cut our India mobile estimates by 1-8% to factor this. While Bharti’s growth outlook remains strong (17%/20% India revenue/EBITDA CAGR over FY23-25), its 10x EV/Ebitda valuation for India business prices this in. Higher/earlier than expected tariff hikes can drive positive surprises,” said global brokerage Jefferies. The brokerage house has downgraded its recommendation on Bharti Airtel shares‘ rating to Hold with target price of ₹855 apiece.

Airtel was the first telecom operator in India to roll out 5G services, starting with eight cities, including the metros. It plans to cover all urban and key rural areas by March 2024. The company, which is rolling out 5G services, exuded confidence about delivering a “best experience in India”.

Meanwhile, telco’s average revenue per user—a key measure of profitability—was ₹190 for the quarter, more than market leader Reliance Jio and higher than estimates suggested by analysts.

Market watchers said that spectrum usage charges savings, ARPU rise, increase in mobile data consumption, and strong showing in the home segment aided Airtel’s Q2 report card.

“Data traffic remained healthy, growing 7.4% QoQ to 13.5b GB with 21GB/user. Bharti’s data traffic and data subscribers are at 48% of RJio, with a much lower capacity gap, highlighting better network experience,” said domestic brokerage and research firm Motilal Oswal while maintaining Buy tag on the telecom stock.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.