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Research
Bharti Airtel - Q1FY14 Result First-Cut - Microsec
Posted On : 2013-07-31 10:58:36( TIMEZONE : IST )
Bharti Airtel Ltd (Bharti) announced its consolidated Q1 FY2014 results on 31 July 2013. Both, the company's top line and bottom line, came slightly below our as well as Bloomberg consensus estimates.
While Bharti's revenues increased 3.6% q-o-q to Rs. 20,299.5 Crores, its net profits expanded 35.5% sequentially to Rs. 688.9 Crores in Q1 FY2014. Growth in the company's top line was continued to be aided by its Indian mobile services business, where revenues expanded from Rs. 11,017.3 Crores in Q4 FY2013 to Rs. 11,601.3 Crores in Q1 FY2014. Bharti, as expected, reported Average Revenue per User (ARPU) of Rs. 200 during the quarter compared with an ARPU of Rs. 193 a quarter earlier. The company also reported healthy revenues growth across its Mobile Services South Asia, Telemedia Services, Airtel Business, and Digital TV services. However, subdued performance from Africa limited the growth in Bharti's top line during the quarter. With strong revenue performance and increased ARPU, the company reported 131 basis points (bps) sequential improvement in EBIDTA Margins to 32.2%. Although the company reported a healthy 35.5% q-o-q increase in net profits, its performance could have been much better after considering some onetime items and foreign exchange loss of Rs. 534 Crores. Excluding these items, Bharti would have reported a profit of Rs. 1,242.9 Crores in Q1 FY2014. Furthermore the company reported 53.7% sequential increase in operating free cash flows, which stood at Rs. 4,249.5 Crores during the quarter.
With strong operating level performance and healthy operating free cash flows, Bharti continues to remain our top pick in the sector. Furthermore, emerging regulatory clarity and expedited processes to allocate spectrum are likely to be positive for the telecom sector in long run. Bharti, being the leader in the market, is expected to be the key beneficiary of the same. With this, we continue to rate the company a 'STRONG BUY' with a target price of Rs. 417.20 per share.
