Bharti Airtel crashes 6% to six-year low on downgrade by Goldman Sachs, others

NEW DELHI: Bharti Airtel shares slumped more than 6 per cent for the second consecutive day to close at a six-year low after Goldman Sachs and other leading banks cut their ratings and downgraded the country's top mobile phone company, following disappointing quarterly earnings.

The company, touted as the poster boy of India's mobile revolution with more than 200 million customers in the country, has crashed almost 13 per cent since Monday when it posted its tenth straight quarter of profit decline and declared earnings that were far below market expectations.

Goldman Sachs downgraded the stock to "neutral" from "buy" with a revised target price of Rs 270 and said it expects operational momentum to be relatively weak in India and Africa, going forward. "We see further downside risks to consensus estimates if Bharti continues to maintain/regain market share at the expense of profitability. We believe Bharti's underperformance may be attributed to regulatory risks and weaker execution, accompanied by loss in market share," Goldman analysts led by Sachin Salgaonkar wrote in a note to clients.

Bharti stock ended Thursday at Rs 256.75, its lowest since October 26, 2006 and has fallen more than 25 per cent this year, when compared to a 14 per cent increase in the broader BSE index.

The telco posted a bigger-than expected 37 per cent dip in profit at Rs 762 crore for the three months ended June 2012, while analysts had expected a net profit of around Rs 1,200 crore. Bharti also admitted for the first time that its loss-making African operations, which it acquired from Kuwait's Zain in a $9-billion debt-funded deal in 2010, may not meet its target of $5 billion in revenues and $2 billion in core earnings, for the year to March 31, 2013.