Bharti Airtel surpasses HDFC to become 5th most valuable listed company

Thus far in the calendar year 2020, Bharti Airtel has outperformed the market by surging 17 per cent as compared to a 33 per cent decline in the HDFC stock price & 24 per cent fall in the S&P Sensex.

Bharti Airtel on Wednesday became the fifth most valuable listed company in terms of market capitalisation (m-cap) after the stock surged 16 per cent during the past three days on expectation of good Q4 earnings. The telecom service provider has surpassed mortgage lender Housing Development Finance Corporation (HDFC).

At 12:53 pm, Bharti Airtel was at number five in the m-cap ranking with Rs 2.90-trillion market-cap, pipping HDFC that was standing at sixth position with a m-cap of Rs 2.81-trillion market-cap, the exchange data shows.

Bharti Airtel has achieved this feat after a gap of more than five years. Earlier, on October 27, 2014, Bharti Airtel had hit the Rs 1.65 trillion market-cap mark, while HDFC had Rs 1.63-trillion market-cap.

Thus far in the calendar year 2020, Bharti Airtel has outperformed the market by surging 17 per cent as compared to a 33 per cent decline in the HDFC stock price and a 24 per cent fall in the benchmark S&P BSE Sensex.

Analysts expect revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) for wireless service providers to improve in the January-March quarter (Q4FY20) led by tariff hike taken in December 2019, though the full impact is expected only in Q1FY21 when most users come for recharge.

“Bharti Airtel’s consolidated revenue/EBITDA is likely to be up by 3.8 per cent quarter on quarter (QoQ) / 5.1 per cent QoQ with 55 bps QoQ improvement in EBITDA margin. We do not see major impact from Covid-19 with some increase in recharges and broadband towards the end of March 2020. We expect subscriber addition of around 2 million in Q4 (plus 3.6 million in Q3) with some consolidation of SIM in low ARPU (average revenue per user) subscribers (moving to single SIM),” Axis Capital said in a telecom sector update.

Meanwhile, analysts at Emkay Global Financial Services expect Bharti Airtel to record healthy performance with 17 per cent sequential growth in wireless revenue, driven by an ARPU increase of 13 per cent. EBITDA should rise 11 per cent QoQ, with margins expanding 132bps, boosted by mobile revenue growth. The Africa business is expected to see stable performance in a seasonally weak quarter, they added.

On the other hand, the brokerage firm expects HDFC’s loan growth to remain healthy at around 13 per cent in Q4FY20 backed by strong demand in the affordable segment and lack of competition. Trend in sanctions in the affordable housing segment will continue to be crucial for future growth trends. Consolidated profit after tax may remain under pressure due to Covid-19 provision and the mark-to-market of RBL Bank’s stake, it added.

Kotak Securities, however, expects HDFC to deliver a 13 per cent year on year (YoY) growth in assets under management (AUM) segment, marginally lower than 14 per cent in 3QFY20, due to lower disbursements in the last 15 days of the quarter on account of Covid-19 outbreak. The core net interest margins (NIM) will likely moderate to 2.4 per cent from 2.5 per cent QoQ, reflecting the recent decline in home loan rates.