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Decent overall performance: Bharti Airtel Q3FY24 revenue grew at a moderate pace of 5.9% YoY/2.3% QoQ to Rs 37,900 Cr, mainly driven by the Indian businesses. Mobile Service India grew by 11.8% YoY accounting for 57.1% of its overall revenue, Mobile Services Africa revenue declined by 7.1% YoY and accounted for 27.2% of its consolidated revenue while the remaining 15.7% was from non-mobile business. It's Adj. PAT after minority interest grew by 53.8% YoY to Rs 2,442 Cr.

Cost cutting initiative aided in margin expansion: EBITDA came in at Rs 19,815 Cr, higher by 7.4% YoY while margin expanded by 74bps YoY to 52.3%. Despite the moderate growth in revenue, its cost optimization efforts as well as improved realizations from quality user base resulted in better operating efficiency aiding in consistent operational performance.

Weak African performance: Despite the addition of 3.5 Mn customers to its user base and ARPUs growing by 8.8% YoY to USD 2.6/user, revenue from Mobile Services Africa declined by 7.1% YoY while it remained flat sequentially at Rs 10,297 Cr, similarly, EBIT declined by 7.3% YoY to Rs 3,414 Cr. The decline in revenue was mainly due to devaluation in African currency especially in Naira, Nigeria and Malawian Kwacha regions.

Healthy Indian mobile performance: Its Mobile Services India business revenue grew by 11.8% YoY/3.3% QoQ to Rs 21,629 Cr, led by customer additions of 3.4 Mn while EBIT grew by 18.9% YoY/2.5% QoQ to Rs 4,795 Cr. Its participation of data customers rose by 400bps YoY to 71.8% while data consumption rose by 5.9% YoY to 22 GB/ user. The consistency in customer addition, gradual transition to 4G/5G user base and from prepaid to postpaid lead the ARPUs to further expand by 7.8% YoY to Rs 208

Non-Core segment performance: Its Home business revenue came in at Rs 1,272 Cr, registering a growth of 23% YoY driven by net addition of 359,000, similarly, EBIT grew by 31.4% YoY to Rs 300 Cr. Digital Services added 388,000 customers with revenue of Rs 784 Cr up by 6% YoY, however, its profitability (EBIT) declined by 1.1% YoY to Rs 91 Cr.

Outlook & Valuation: Despite the moderation in customer addition, it has consistently been able to expand its ARPUs in the Indian business by targeting quality customers and maintaining its active user base. It has been gradually implementing its 5G infrastructure across the country while it is also targeting more than 60k villages which shall aid in customer addition and ARPUs expansion. Further, its strategic focus on postpaid addition and improving economic condition in African markets and tariff hike as well as monetization of 5G services shall result in overall growth for the company. Factoring this, we estimate its revenue/EBITDA/PAT to grow at a CAGR of 16.6%/19.2%/19.4% over FY23-FY26E. We maintain our Buy rating and revise our target price upwards to Rs 1,366.

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