Bharti Airtel: Q2FY15 Result Analysis

India’s largest telecom player Bharti Airtel declared its second quarter results. The company posted decent numbers during the quarter despite of seasonally weak quarter. The company showed 8.4 per cent increase in customer base to 303.7 million customers compared to corresponding quarter last year. Mobile data traffic too showed significant growth of 94.6 per cent to 78.1 billion MBs during the quarter compared to 40.1 billion MBs in same quarter last year.

During the quarter under review, the company’s consolidated revenues showed 7.1 per cent growth to Rs 22845 crore during Q2FY15 against Rs 21324 crore in Q2FY14. Interestingly, the mobile data revenues increased by 66.7 per cent on yearly basis to Rs 2540 crore during the said quarter. Further, the mobile data revenues constituted 11.1 per cent of Bharti’s total revenue compared to 7.1 per cent in the same quarter last year.

The operating expenses of the company during the September’14 quarter increased by mere 3.9 per cent to Rs 10094 crore compared to Rs 9717 crore in the corresponding quarter last year, exhibiting improved productivity. The EBITDA of the company improved by 12.1 per cent on yearly basis to Rs 7705 crore during this quarter. The EBITDA margin too improved during the quarter to 33.7 per cent as compared to 32.2 per cent in the same quarter last year. Further, on positive front, the finance charges of the company came down by 43.8 per cent to Rs 906 crore as compared to Rs 1611 crore in the corresponding quarter last year.

Bharti’s net profit showed a handsome growth of 170 per cent on yearly basis to Rs 1383 crore during Q2FY15 against Rs 512 crore during the same quarter last year.

The overall numbers are partly better for the company during the second quarter. The African operations of the company are facing problems in terms of margin growth. However, the company is expected to grow its EBITDA margin with a moderate growth rate. However, on domestic front, the company is experiencing expansion in its EBITDA margins and also expansion in realisation in mobile data business. Further, the expected TRAI recommendations are also expected to benefit the Indian telecom companies in near future.

We are of the opinion that investors should hold their positions in the company and watch out for next quarter to take fresh exposure in the stock.