InvestorQ : Bharti Airtel appears to have made a profit this quarter. Is it a sign of a turnaround in the performance of the stock?
manisha Kolvenkar made post

Bharti Airtel appears to have made a profit this quarter. Is it a sign of a turnaround in the performance of the stock?

Answer
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Moii Chavate answered.
1 year ago


We need to realize that the telecom sector in India is still under pressure of too low ARPUs and high levels of debt accumulated over the years. The entry of Jio 2 years back has only queered the pitch for these telecom companies. .

How were the Bharti Airtel Q4 results?

Bharti Airtel reported net profit of Rs.107 crore in the March quarter. However, this profit was largely assisted by an exceptional gain of Rs.2022 crore arising from write backs. If that is removed, the stock still would have given a loss of more than Rs.1000 crore in the quarter, which was the consensus estimate anyway. The total revenues for the quarter were at Rs.20,602 crore. For the full financial year, the net profit of Bharti Airtel was lower by 65% on a YOY basis. .

Should you buy the Bharti Airtel stock at current prices?

One needs to be a little cautious of the stock at current levels. The stock will find it hard to justify any future price movement purely on the basis of the weak ARPUs of the company. Also, the competition on the data side is quite strong and any accretion in profits is going to be difficult. Airtel is currently in the midst of its Rs.25,000 crore rights issue and that is also likely to substantially dilute the equity of the company. We suggest staying away from the telecom sector in general and the stock in particular. Value creation may be too difficult.