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Muted top-line growth and declined profitability: Bharti Airtel consolidated revenue from operations reported flattish growth of 4.4% YoY while declined sequentially by 0.8% QoQ to Rs 37,599cr. The company reported healthy business in India with a growth of 2% QoQ/13% YoY to Rs 22,066cr, however, African mobile services revenue reported a de-growth of 9.7% QoQ/15.8% YoY to Rs 9,293cr. Owing to increased operating overheads EBITDA declined sequentially by 2.3% and single digit increase on YoY basis by 3.6% to Rs 19,365cr with a margin decline of 78bps QoQ/42bps YoY to 51.5%. Consequentially, PAT reported a de-growth of 15.2% QoQ/31.1% YoY to Rs 2,072cr.

India business remains healthy: Bharti Airtel’s India business which forms 58.7% in terms of revenue and 46.3% in terms of EBIT reported revenue growth of 2% QoQ/13% YoY and EBIT growth of 0.7% QoQ/18.3% YoY. India business reported healthy subscribers’ growth rate of 2.4% QoQ/8.3% YoY to 406mn while ARPU growth remained flat sequentially at 0.5% QoQ and YoY growth of 8.3% to Rs 209. The company continues to add 4G subscribers at a healthy rate of 3.2% QoQ/12.8% YoY which shall aid the ARPU growth in the long term.

African business continue to decline: Africa business continued to report weak financials during the quarter as the mobile service revenue declined by 9.7% QoQ/15.8% YoY to Rs 9,293cr while EBIT declined by 15.6% QoQ/19.9% YoY to Rs 2,883cr. Despite these headwinds, the company remains optimistic about its performance in the region, leveraging its strong operational capabilities and market presence. The slowdown in economic growth has been a temporary setback, but Airtel's long-term outlook remains positive, with plans for continued investment, expansion, and customer-centric initiatives to drive sustainable growth in the region.

Healthy performance of other businesses: The Company’s other segment continued to grow at a steady pace. The company derives value from business segment and home service which reported healthy growth of 14.1%/20% YoY. Its B2B segment has been a cornerstone of its business strategy, catering to enterprise clients with tailored solutions and services. The exceptional performance in the domestic enterprise business, growing at a rate of 18-20%, significantly outpaces its listed peers, which grew at mid-single digits. The outperformance is combination of factors, including gaining market share in connectivity, launching successful solutions like Airtel IQ and leveraging the potential of cloud and analytics services. The recent deal with Google in the cloud area is a testament to Airtel's strategic expansion efforts, highlighting the immense growth opportunities that lie ahead in the B2B segment.

Outlook and valuation: Bharti Airtel reported decent top line growth, however, its India business reported steady growth. The company has added subscribers at a healthy pace however; APRU remained flat during the quarter. The management expects ARPU to expand by H2FY25. The company continues to expand its reach geographically and expects premium plans to pick up gradually. Financially, we expect revenue/EBITDA/PAT to grow at a CAGR of 19%/22%/24% over FY24-26E. We change our rating to Accumulate and also revise our target price to Rs 1,470 valuing the company at EV/EBITDA multiple of 9x of its FY26E financials.

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