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Sustained Growth Backed by Strong Execution & Capacity Expansion
Est. Vs. Actual for Q2FY27: Revenue: BEAT; EBITDA Abs: BEAT; PAT: BEAT
Changes in Estimates post Q2FY27 FY27E/FY28E: Revenue: 0%/0%; EBITDA Abs: 0%/0%; PAT: 0%/0%
Recommendation Rationale
* Fiber-Led Broadband Expansion Improving Customer Lifetime Value: Airtel's broadband strategy is increasingly focused on building a higher quality, fibre-led customer base rather than pursuing additions through wireless connectivity. The company added 6.7 Lc Homes customers during Q2, while management stated that fibre offers better customer retention and lifetime value compared with FWA. Its One Airtel proposition further strengthens this strategy by encouraging households to bundle mobile, broadband and other services under a single relationship.
* Sustained ARPU Growth Through Premiumisation and Postpaid Expansion: Airtel's continued focus on improving customer mix is supporting steady ARPU growth, which increased to Rs 271 in Q2FY27 from Rs 264 in the previous quarter. The shift towards higher-value prepaid plans and strong postpaid additions of 1.2 Mn customers reflect improving monetisation rather than dependence solely on subscriber growth. With the 5G customer base crossing 200 Mn and postpaid penetration still at just 8.3%, creating scope to increase the share of higher-paying customers.
* Financial Services, Data Centres & Cloud Verticals to Strengthen Profitability: The company is gradually diversifying with data centres, cloud, cybersecurity, financial services and enterprise digital solutions emerging as additional growth drivers. Its 1 GW data centre ambition, the launch of the AirPlow cloud platform and growing traction in Airtel Finance and Payments Bank provide opportunities to participate in rising enterprise demand for digital infrastructure and services. Moreover, the Airtel Money Africa listing also highlights the value being created in its financial services business
Sector Outlook: Positive Company
Outlook & Guidance: The company has a strong focus on quality customers with increasing ARPU and revenue. Management is confident of gaining industry-leading growth, backed by robust rural penetration and a superior services portfolio.
Current Valuation: SOTP-based
Current TP: Rs 2,530/share (Unchanged)
Recommendation: From a long-term perspective, we believe Bharti Airtel is well-positioned to continue gaining market share, backed by the highest penetration and minimal Capex requirements. Given its stronger digital portfolio supported by rising per-user data and growing business verticals, we remain positive about the company’s future growth. We maintain our BUY recommendation on the stock.
Financial Performance
In Q2FY27, reported revenue stood at Rs 60,878 Cr, up 16.7% YoY and 4.0% QoQ, led by strong performance in India and Africa business. EBIT grew 24.1% YoY and 6.6% QoQ to Rs 20,329 Cr and EBIT margin stood at 33.4% (+198bps YoY, +82bps QoQ). The company made a one time exceptional charge of Rs 180 Cr towards listing related expenses of Airtel Money. Thus, PAT stood at Rs 10,710 Cr, up by 23.8% YoY and 7.0% QoQ. ARPU for the quarter stood at Rs 271 (Rs 264 in Q1FY27 and Rs 256 in Q2FY26). Capex for the quarter stood at Rs 12,467 Cr, of which India was Rs 9,908 Cr, plus Rs 2,826 Cr for the data-centre land parce
Outlook
From a long-term perspective, Bharti Airtel remains well-positioned for sustainable growth, backed by its strong digital services portfolio, disciplined capital management, and focus on high-value customer segments. The company expects gradual ARPU improvement, 4G/5G expansion, and B2B growth to drive long-term profitability. We remain optimistic about the company’s future growth.
Valuation & Recommendation
The company anticipates steady revenue growth across its core segments, supported by rising 4G and 5G adoption, broadband penetration, and increased demand for enterprise solutions. Operating margins are expected to remain robust, aided by operational efficiencies, market penetration, network optimisation, and monetisation of digital services. The company's strategy is gradually extending beyond traditional connectivity into financial services, data centres, cloud and AI-led enterprise solutions. While the 1 GW data centre ambition and digital businesses offer long-term growth opportunities, their contribution will depend on execution and commercial monetisation. Moreover, Management continues to prioritise financial discipline, targeting sustained free cash flow generation and progressive debt reduction. Hence, we maintain our BUY recommendation on the stock. Based on the SOTP valuation, we arrive at a TP of Rs 2,530/share, implying an upside of 21% from the CMP.
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SEBI Registration number is INZ000161633
