Bharti Airtel - No respite in near term, downgrade to HOLD - Emkay

Reco: HOLD
CMP: Rs 274
Target Price: Rs 306

- Q1FY13 results were disappointing- Revenues at Rs193.6bn (up 3.3% QoQ), EBITDA at Rs58.5bn (-6% QoQ) & APAT at Rs6.6bn (-40% QoQ).

- Operating metrics for India / Africa witnessed significant pressure. Traffic growth for India / Africa stood at 4%/3%. ARPM for India / Africa declined 2.6%/3%.

- Muted revenue growth & cost escalation led to significant pressure on margins. Network opex /SG&A cost were higher by 9%/13% qoq. Cons. margin declined 306bps qoq to 30.2%.

- Going forward, stock lacks near term catalyst as KPI's would remain under pressure & rebound in margin is also ruled out. Cut EPS to Rs10.5/Rs15.7 for FY13E/14E. Downgrade to HOLD with TP of Rs306 (assuming -ve Rs31 regulatory impact)

Source : Equity Bulls

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