On Monday, CLSA maintained an Outperform rating on Bharti Airtel Ltd, with a steady price target of INR1,820.00. The firm's analysis highlighted that Airtel Africa's second-quarter fiscal year 2025 (2QFY25) revenue and Ebitda experienced a decline of 3%-9% year-over-year (YoY), but showed an improvement of 5%-8% quarter-over-quarter (QoQ), reaching US$1.2 billion and US$564 million, respectively.
In terms of constant currency, the African division saw a 21% YoY increase in revenue and a 16% YoY rise in Ebitda, surpassing CLSA's forecasts.
The report also pointed out significant growth in data and mobile money revenue, which soared by 29%-30% YoY. Despite a 74% YoY decrease in Africa subscriber net additions, totaling 156.6 million, the average revenue per user (Arpu) went up by 10% YoY and 5% QoQ to US$2.3. The past fiscal year's naira devaluation resulted in substantial foreign exchange losses of US$71 million, following a loss of US$770 million in FY24.
Airtel Africa's free cash flow in the second quarter of FY25 was robust at US$395 million, and the gearing ratio stood at a comfortable 2.3 times Ebitda. CLSA's commentary emphasized that while Africa contributes to 25% of Bharti Airtel's consolidated operations, the Indian market remains a key determinant of the company's stock valuation.
InvestingPro Insights
To complement CLSA's analysis of Bharti Airtel Ltd, recent data from InvestingPro provides additional context for investors. The company's market capitalization stands at an impressive $120.5 billion, reflecting its significant presence in the telecommunications sector. This aligns with the InvestingPro Tip that Bharti Airtel is a "prominent player in the Wireless Telecommunication Services industry."
The company's revenue for the last twelve months as of Q1 2025 was $18.11 billion, with a growth rate of 5.06%. This growth, albeit modest, supports the positive outlook on Airtel Africa's performance mentioned in the CLSA report. Moreover, the gross profit margin of 63.26% indicates a strong ability to generate profit from its core business activities.
Interestingly, InvestingPro Tips highlight that Bharti Airtel has "raised its dividend for 3 consecutive years," which may be attractive to income-focused investors. However, it's also noted that the stock is "trading at a high earnings multiple" and "trading at a high P/E ratio relative to near-term earnings growth." This is evidenced by the current P/E ratio of 95.31, suggesting investors are paying a premium for future growth prospects.
The company's stock performance has been remarkable, with a one-year price total return of 81.87% as of the latest data. This "high return over the last year" is another InvestingPro Tip that underscores the market's positive sentiment towards Bharti Airtel.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Bharti Airtel, providing a deeper dive into the company's financial health and market position.
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