Global brokerage Citi Research has reiterated its 'Buy' rating for Bharti Airtel, setting a target price of Rs 2,230. This optimistic outlook follows the telecom giant's robust performance in the September quarter (Q2 FY27), which saw better-than-expected revenue and EBITDA growth in its India mobile business.
Despite an elevated subscriber churn rate, particularly after the temporary withdrawal of its entry-level prepaid plan, Bharti Airtel's financial results impressed analysts. The company has since restored its popular Rs 299 prepaid plan, although with a slightly reduced daily data allowance of 1 GB, down from the previous 1.5 GB for many users.
Q2 FY27 Performance Highlights
Bharti Airtel's India mobile revenue and EBITDA experienced quarter-on-quarter growth of 3.4 percent and 3.8 percent, respectively, both surpassing Citi's estimates by 1 percent. This strong showing was primarily driven by better-than-anticipated average revenue per user (ARPU) accretion, which successfully offset a dip in net subscriber additions during the quarter.
The company's premiumisation strategy, however, led to a decline in net subscriber additions, which fell to 0.7 million in Q2 from 3.3 million in the preceding quarter. Concurrently, subscriber churn increased from 2.6 percent to 2.9 percent, a likely consequence of the rationalisation of prepaid plans in August 2026, which included the discontinuation of the Rs 299 entry-level smartphone plan. Bharti Airtel's total subscriber base currently stands at 377 million.
Enterprise Segment and Overall Financials
Beyond its mobile business, Airtel's enterprise segment demonstrated exceptional growth. Airtel Business revenue surged by 11 percent year-on-year (YoY), with its EBITDA growing by an impressive 15 percent YoY. Overall India revenue and EBITDA, excluding Indus Towers, increased by 11 percent and 12 percent YoY, respectively.
Consolidated EBITDA reached Rs 35,200 crore, marking a 5 percent sequential increase and exceeding Citi's estimates by 1.5 percent. Capital expenditure (capex) and free cash flow generation remained stable, though net debt saw a 6 percent quarter-on-quarter increase, largely attributed to dividend payouts during the period.
Potential Downside Risks
While maintaining a bullish stance, Citi also highlighted several potential downside risks for Bharti Airtel. These include the possibility of increased competitive intensity impacting India mobile revenues, delays in implementing tariff hikes, and higher-than-expected capital expenditure for its 5G network rollout, data centers, or future spectrum auctions. Additionally, lackluster performance in its Africa operations and potential stake sales by promoters could also pose challenges.
On Friday, Bharti Airtel shares closed 1.66 percent higher at Rs 2,096.25, reflecting positive market sentiment.