The Bharti Airtel stock has been surging in the past three trading sessions and has emerged as the best performer on Nifty50. The firm's consolidated revenues in the June quarter rose 2.6% sequentially, led by a 3.3% increase in Arpu (average revenue per user). The divergence in the performance of Vodafone-Idea and Airtel is what has given confidence to inves-tors, giving the stock a big boost.
The growing appetite for the stock helped Bharti Airtel become the 13th most-valued firm by market capitalisation (m-cap) on Tuesday from its rank of 21 at the beginning of the year. The market valuation of the stock climbed to Rs 1.89 lakh crore after surpassing that of Axis Bank, Maruti Suzuki, ONGC and many others.
In the past six months, the firm's shares have soared nearly 30% against a 1.03% loss clocked by Nifty50 during the same period. On Tuesday, the stock added another 3.01% to hit a near 15-month high. The m-cap has added about Rs 23,000 crore post its Q1 results.
The surge in the stock came at a time when 60% of the Nifty constituents yielded negative returns in the past six months.
The company did well on the operating metrics front in Q1 with its Arpu increasing 5.1% sequentially at Rs 129, higher than Jio's Rs 122 and Vodafone Idea's Rs 108. In fact, this is the first time that Bharti's Arpu came higher than that of Jio.
Analysts believe Arpu growth will likely extend on rising data consumption and 3G subscribers moving to 4G before retirement of its 3G network by March 2020. "The intrinsic movement or improvement in ARPU will now be a function of upgrading from 2G to 4G, and our program on Airtel Thanks, which will drive some upgrading," Gopal Vittal, MD and CEO (India and South Asia), Bharti Airtel, said post Q1 results.
Edelweiss Research believes the industry structure is fundamentally changing with all operators looking to deleveraging their balance sheets by selling non-core assets like fibre and towers and operators are designing tariff plans to ensure they get maximum Arpu from customers.
"Bharti, with its strong 4G subscriber addition, is well placed to capitalise on higher smartphone pricing," the domestic brokerage said.