Bharti Airtel Q3FY25 Preview: Net Profit Set to Double on Tariff Hike Gains
Bharti Airtel is set to announce its Q3FY25 earnings on February 6, and analysts predict a strong financial performance, primarily driven by increased ARPU (Average Revenue Per User) due to the July 2024 tariff hike, subscriber upgrades, and Indus Towers consolidation. However, muted subscriber additions and weak performance in Airtel Africa might act as limiting factors.
Key Financial Expectations
A Moneycontrol poll of seven brokerage firms forecasts Bharti Airtel’s consolidated net profit to double year-on-year, reaching approximately ₹5,039 crore. The revenue is estimated to increase by 16% to ₹43,874 crore compared to Q3FY24. Additionally, analysts expect the company’s EBITDA margin to stabilize at around 54%.
For comparison, in Q3FY24, Bharti Airtel’s net profit surged 54% YoY to ₹2,442 crore, with revenue rising 6% to ₹37,900 crore. The company had cited currency devaluation in Africa as a major growth constraint. During that period, ARPU increased slightly to ₹208 from ₹203 in the previous quarter.
In Q2FY25, Bharti Airtel reported a massive 168% YoY increase in net profit to ₹3,593 crore, driven by its first tariff hike in over two years. However, a one-time foreign exchange loss of ₹854 crore impacted the results. Revenue for Q2FY25 stood at ₹41,473 crore, and ARPU jumped to ₹233 from the previous quarter.
Key Drivers Behind Q3FY25 Growth
1. ARPU Growth & Tariff Hike Impact
- Analysts expect ARPU to reach ₹244, reflecting the full impact of the July 2024 tariff hike and subscriber upgrades.
- JM Financial states, “ARPU is expected to grow further, supported by a better subscriber mix.”
2. Wireless Revenue & Subscriber Additions
- Bharti Airtel’s India wireless revenue is expected to rise by 5% QoQ, according to Motilal Oswal, mainly due to the residual impact of tariff hikes.
- The company is likely to add 35 lakh new subscribers, with a significant increase in 4G/5G users.
3. Indus Towers Consolidation Boost
- The Indus Towers consolidation from mid-Q3FY25 will provide a one-time boost to reported revenue.
- Nuvama Research highlights, “The consolidation of 42 days of Indus Towers will add approximately 4.1% QoQ growth to the India mobile services segment.”
4. Enterprise & Home Broadband Expansion
- Enterprise & Home Broadband are expected to drive non-wireless growth.
- Kotak Institutional Equities predicts a 7% sequential revenue increase in the broadband segment, driven by strong demand.
- Airtel Africa, however, may post a slower 3.7% growth QoQ, impacted by currency devaluation.
Key Focus Areas for Investors
- 5G Adoption Trends: Analysts will closely watch Airtel’s 5G expansion, subscriber growth, and monetization strategies.
- Capex & Future Tariff Hikes: Investors are keen to see Airtel’s capital expenditure plans and any hints of future price hikes.
- Enterprise Business Growth: Bharti Airtel is actively expanding its Enterprise offerings, targeting a ₹500 billion market in cloud, cybersecurity, and data centers.
Bharti Airtel: Key Financial Ratios
| Metric | Value |
|---|---|
| Market Cap | ₹9,95,001 Cr. |
| Current Price | ₹1,661 |
| High / Low | ₹1,779 / ₹1,098 |
| Stock P/E | 70.2 |
| Book Value | ₹153 |
| Dividend Yield | 0.48% |
| ROCE (Return on Capital Employed) | 13.1% |
| ROE (Return on Equity) | 14.9% |
| Debt to Equity Ratio | 2.59 |
| Industry P/E | 40.8 |
| Debt | ₹2,25,541 Cr. |
| PEG Ratio | 0.57 |
| Intrinsic Value | ₹298 |
| Graham Number | ₹273 |
| Piotroski Score | 5.00 |
Conclusion
With strong ARPU growth, improved subscriber mix, and the Indus Towers boost, Bharti Airtel is poised for significant YoY profit growth in Q3FY25. However, muted subscriber additions and Airtel Africa’s subdued performance remain concerns. Investors should closely monitor 5G expansion, capex plans, and enterprise business growth for long-term profitability.
Stay tuned as Bharti Airtel announces its Q3 results on February 6!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.