Bharti Airtel share price zooms over 12%: MSCI rejig triggers strong buying; Jul-Sep results delight

Bharti Airtel share price zoomed 12.65 per cent to Rs 487.80 apiece on BSE after National Securities Depository Ltd (NSDL) uploaded the approval of 100 per cent foreign institutional investor (FII) limit, while on the other hand the company posted encouraging quarterly results. According to a market analyst, NSDL’s move will likely result in an increase in Bharti Airtel foreign inclusion factor (FIF) in the Morgan Stanley Capital Investment (MSCI) indices, which could result in more fund inflows for the telecom giant.

Bharti Airtel’s current FIF stands at 0.23 which will increase to 0.43. Currently, the stock has a weight of 1.36 per cent which is likely to increase to 2.5 per cent. “Assuming that the MSCI benchmark index makes around USD 35 bn, it would imply a buying of 64.9 million shares (8.5x average delivery volumes),” the analyst said.

Earlier, Tuesday evening, Bharti Airtel reported its fiscal second-quarter consolidated net loss shrunk 97% on-year to Rs 763.2 crore from Rs 23,044.90 crore. Its July-September consolidated revenue rose 22 per cent to Rs 25,785 crore from Rs 21,131 crore in the same period a year ago.

Analyst Reviews

“We are bullish on Bharti Airtel considering that industry dynamics are looking favourable, it is expected to gain revenue market share and the stock has corrected 30% from its high which provides valuation comfort,” said Keshav Lahoti — Associate Equity Analyst, Angel Broking Ltd.

Research and brokerage firm Motilal Oswal Financial Services said that the Bharti Airtel stock was a major underperformer in the last quarter, however, earnings growth has been resounding. Motilal Oswal noted that the adjusted gross revenue (AGR) liability has hurt the net debt. Both net debt and interest cost rose due to the inclusion of the Rs 23,400 crore AGR liability. Thus, net debt to EBITDA increased to 2.9x on 2QFY21 annualized EBITDA.

Key Takeaways from Bharti Airtel’s Q2FY21 Results

• Bharti Airtel’s average revenue per user (ARPU) rose to a three-year high at Rs 162 in the second quarter due to a strong 14 million addition of 4G subscribers, and data usage remaining in the high zone of 16 GB a month. ARPU was 3.4 per cent higher than the preceding quarter. 
• Company’s EBITDA came in at Rs 11,848 crore, which was 11.36 per cent higher than the preceding quarter. 
• EBITDA margin stood at 46 per cent against 44.4% in the preceding quarter. 
• Despite robust data traffic volumes of 760 crore GB (with 16.4 GB/user), data traffic/subscribers are less than half of Reliance Jio levels. 
• Motilal Oswal Financial Services said that the gap in network capacity is significantly smaller, thus highlighting a healthy network capacity and room for improvement. It has a healthy 5.37 lakh base stations (closer to RJio), with the number of unique broadband towers also at a healthy 1.9 lakh.

In the morning session, Bharti Airtel shares were trading 7.6 per cent higher at Rs 465.85 apiece, as compared to a 0.20 per cent fall in S&P BSE Sensex.