Why Did Bharti Airtel Stocks Surge Despite Negative Q4 Results?

Introduction: After many years, the telecom tariff has risen, significantly impacting customers and driving revenue growth for Airtel. Consequently, this has led to a surge in Bharti Airtel's stock prices, despite disappointing quarterly financial results. This article delves into the multifaceted reasons behind this unprecedented rise.

Technical and Fundamental Analysis

The primary driver of Bharti Airtel's stock surge is the strong performance in fundamental metrics, despite recording a net loss during the quarter. We will explore both technical and fundamental perspectives to uncover the reasons behind the stock's rise.

Technical Analysis

Trend Analysis

Bharti Airtel's stock has exhibited a clear upward trend across various timeframes, indicating a bullish scenario:

Daily Chart: Bharti Airtel shows a clear uptrend with higher highs (HH) and higher lows (HL). Weekly and Monthly Charts: Both displays an uptrend, reinforcing the bullish sentiment. Quarterly Chart: A strong uptrend is evident, further validating the stock's overall positive trajectory.

This trend suggests that the stock is likely to continue its upward movement as long as it holds above support levels and breaks through resistance.

Nifty vs. Bharti Airtel Analysis

Notably, while the Nifty index shows a clear downtrend, Bharti Airtel's stock is exhibiting a robust uptrend. This contrast highlights Bharti Airtel's resilience and strength, making it an attractive stock for investors to consider on dips.

Support and Resistance Zones

Bharti Airtel was trading in a daily demand zone from 536.20 to 528.30, indicating potential demand from institutional investors. A strong 20 EMA further bolsters this zone. Moreover, on 18th May 2020, the stock entered a supportive hourly demand zone, creating an opportunity for entry.

Fundamental Analysis

Revenue Growth

Bharti Airtel has reported a 15% increase in revenue to Rs 23723 crore for the quarter ended March 31. This growth is significant, driven by the tariff hikes and the addition of 12.5 million 4G subscribers.

ARPU and Subscriber Growth

The company's Average Revenue Per User (ARPU) has risen to Rs 154, a 25% increase from the previous quarter. This growth is largely attributed to tariff hikes implemented by all telecom operators in December last year. The lockdown further fueled data usage, leading to a surge in gross subscribers.

Operational Performance in Africa

Africa continues to contribute significantly to Bharti Airtel's performance, contributing around 30% of the company's reported consolidated EBITDA. Strategic initiatives have driven steady improvement in African operations, providing a strong foundation for future growth.

Financial Management

Bharti Airtel has taken proactive measures to deleverage its balance sheet, including rights issues and IPOs. In January 2020, the company raised Rs 21501.7 crore through a combination of QIP and FCCBs. This financial maneuvering positions the company well for future challenges and opportunities.

Conclusion

Despite the negative results reported during the Q4 quarter, Bharti Airtel's fundamentals remain robust. The strong revenue growth, increase in ARPU, and geopolitical contributions from Africa are key factors supporting the stock's rise. The technical analysis also confirms a bullish trend, making Bharti Airtel a compelling investment opportunity.

Lessons to Learn

Modern trading requires a balance between risk management and profit maximization. Avoid holding onto losing positions for extended periods. Properly analyze news and historical data before making investment decisions.

So, while it's important to stay updated on company results, a comprehensive analysis of both technical and fundamental factors is essential for making informed investment decisions. Trade well and trade safe.