Bharti Airtel rebounds from lows; Q4 earnings disappoint

NEW DELHI: Shares of Bharti Airtel, which slipped nearly 5 per cent in early morning trade on Thursday, recouped most of their morning losses even though the telecom major reported lower-than-expected earnings for the quarter ended March 2013.

At 12:10 pm, Bharti Airtel was trading 0.4 per cent higher at Rs 320.55. It hit a low of Rs 305.25 and a high of Rs 324.00 in trade today.

Bharti Airtel, India’s largest telecom company by revenue and customers, reported a net profit of Rs 509 crore for the quarter ended March 2013, against a net profit of Rs 284 crore in previous quarter.

PAT was lower than ET Now poll estimate of Rs 736 crore due to higher forex loss than expected and one time additional tax outgo, say analysts. Additionally, results were hit by higher depreciation, amortisation, interest and tax.

According to experts, the decline in the stock was largely a knee-jerk reaction to the quarterly numbers which was below market expectation, but fundamentals of the company still look intact.

“Competitive pressures in the telecom space are easing off in the sector. The smaller players are exiting, pricing power is coming back, almost all the discounted tariff vouchers have been taken out of the market, revenue per minute seems to be improving steadily,” said Saurabh Mukherjea of Ambit Capital.

“Valuations make the sector very attractive and with improving competition dynamics and attractive valuations, the sector will come back over the next six months,” he added.

According to Bhavesh Gandhi, sector analyst, IIFL, the real disappointment has been PAT number at Rs 509 crore, which was much below expectations.

“We would be buyers in stock at current levels and see over 10 per cent upside. We would recommend to incrementally ‘add’ Bharti in portfolio,” he said.

The company's revenues were in line with estimates at Rs 20,488 crore, up 1.23 per cent, as compared to Rs 20,239 crore a quarter ago.

The company reported a forex loss at Rs 203 crore during March quarter against a loss of Rs 250 crore in previous quarter.

Bharti Airtel also said that it will acquire 30 per cent stake in Bangladesh's Warid Telecom to make it a wholly- owned subsidiary of the firm.

In January 2010, Bharti had acquired a 70 per cent stake in the Bangladesh arm of Warid Telecom, a wholly-owned subsidiary of the Dhabi Group.