However, the underlying operational performance tells a more encouraging story. Net sales surged 19.62% year-on-year to ₹53,981.60 crores, whilst operating margins expanded to 57.02%, reflecting the telecom giant's pricing power and operational efficiency. The company serves over 550 million customers across 17 countries in South Asia and Africa, maintaining its position as one of the world's top three mobile operators by subscriber base.
The sequential quarter-on-quarter comparison reveals a more nuanced picture. Consolidated net profit declined 2.37% from ₹6,791.70 crores in Q2 FY26, whilst net sales advanced 3.52% from ₹52,145.40 crores. For the nine-month period ending December 2025, the company posted consolidated net profit of ₹19,369.10 crores on revenues of ₹1,55,589.60 crores, representing a 27.32% profit growth and 24.37% revenue expansion compared to the corresponding period last year.
Financial Performance: Revenue Momentum Drives Margin Expansion
Bharti Airtel's Q3 FY26 financial performance demonstrates the company's ability to translate subscriber growth and pricing improvements into sustained revenue expansion. Net sales of ₹53,981.60 crores represented the highest quarterly revenue in the company's history, driven by tariff optimisation across mobile services and robust growth in enterprise and digital services segments.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Cons. Net Profit (₹ Cr) | QoQ Growth | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 53,981.60 | +3.52% | 6,630.50 | -2.37% | 57.02% |
| Sep'25 | 52,145.40 | +5.42% | 6,791.70 | +14.19% | 56.69% |
| Jun'25 | 49,462.60 | +3.31% | 5,947.90 | -46.04% | 56.28% |
| Mar'25 | 47,876.20 | +6.09% | 11,021.80 | -25.43% | 56.41% |
| Dec'24 | 45,129.30 | +8.82% | 14,781.20 | +311.37% | 54.50% |
| Sep'24 | 41,473.30 | +7.70% | 3,593.20 | -13.62% | 52.68% |
| Jun'24 | 38,506.40 | — | 4,159.90 | — | 51.18% |
The operating profit before depreciation, interest, and tax (PBDIT), excluding other income, reached ₹30,782.80 crores in Q3 FY26, marking the highest quarterly operating profit in company history. This represented a 57.02% margin, up from 56.69% in Q2 FY26 and 54.50% in Q3 FY25, demonstrating consistent margin expansion over the past year. The 252 basis points year-on-year margin improvement reflects operational leverage from network investments and improved pricing discipline across the industry.
Net Sales (Q3 FY26)
Consolidated Net Profit
Operating Margin (Excl OI)
PAT Margin
However, the profit after tax (PAT) margin of 15.75% in Q3 FY26 stood significantly below the 35.75% reported in Q3 FY25, primarily due to exceptional gains recognised in the year-ago quarter. On a more normalised basis, comparing Q3 FY26 to Q2 FY26, the PAT margin contracted 84 basis points from 16.59%, reflecting higher depreciation charges of ₹13,420.10 crores (up 1.81% quarter-on-quarter) and interest costs of ₹5,623.20 crores (up 15.57% quarter-on-quarter).
The tax rate normalised to 30.88% in Q3 FY26 from 29.80% in Q2 FY26, with absolute tax payments of ₹3,798.50 crores. For the full year FY25, the company had reported an unusually low tax rate of 2.40%, which benefited from deferred tax adjustments and exceptional items. The return to a more normalised tax rate in Q3 FY26 suggests future earnings will face a higher effective tax burden.
Operational Excellence: Network Investments Yield Pricing Power
Bharti Airtel's operational performance in Q3 FY26 underscores the company's strategic focus on network quality and capacity expansion, which has enabled sustained tariff increases across its subscriber base. The company's five-year sales growth of 15.68% and EBIT growth of 37.60% demonstrate consistent execution of its premiumisation strategy, even as capital intensity remains elevated in the telecommunications sector.
Return on Capital Efficiency: Highest Half-Yearly ROCE
Return on capital employed (ROCE) for H1 FY26 reached 19.46%, the highest half-yearly figure in recent periods, compared to an average ROCE of 13.45% over the past five years. This significant improvement reflects enhanced profitability from pricing actions and improved asset utilisation. The latest ROCE of 19.64% demonstrates that Bharti Airtel is generating strong returns on the substantial capital deployed in network infrastructure, spectrum, and technology upgrades.
Return on equity (ROE) averaged 15.49% over the past five years, with the latest ROE at 26.72%, indicating efficient capital allocation and improving profitability for shareholders. Higher ROE values signal better capital efficiency and profitability, and Bharti Airtel's rising ROE trend represents a key strength in the investment thesis.
The company's balance sheet as of March 2025 reflected total shareholder funds of ₹1,13,671.90 crores, up from ₹82,018.80 crores in March 2024, driven by retained earnings and equity infusions. Long-term debt stood at ₹1,04,863.80 crores, down from ₹1,30,962.60 crores in the previous year, demonstrating deleveraging efforts. The debt-to-equity ratio for H1 FY26 improved to 1.77 times, the lowest in recent periods, compared to an average of 1.56 times over five years.
Cash and cash equivalents for H1 FY26 reached ₹18,983.90 crores, the highest half-yearly balance, providing financial flexibility for spectrum acquisitions, network investments, and potential acquisitions. The company generated cash flow from operations of ₹98,332 crores in FY25, up from ₹78,898 crores in FY24, reflecting strong cash generation capabilities despite capital-intensive operations.
The Tariff Increase Cycle: Sustainability and Competitive Dynamics
India's telecommunications sector has witnessed multiple rounds of tariff increases over the past 18 months, with Bharti Airtel leading the industry in implementing price hikes across prepaid and postpaid segments. The company's ability to sustain these increases without significant subscriber churn demonstrates the inelastic nature of mobile data demand and the oligopolistic market structure following the consolidation of the sector to three major players.
Market Context: Industry Pricing Power Strengthens
The Indian telecom sector's average revenue per user (ARPU) has increased substantially following years of intense price competition. Bharti Airtel's premium positioning and focus on high-value customers have enabled the company to capture a disproportionate share of industry revenue growth, even as subscriber additions moderate. The company's enterprise and digital services segments provide additional revenue diversification beyond consumer mobile services.
However, concerns remain regarding the sustainability of aggressive tariff increases. Regulatory oversight, competitive dynamics with Reliance Jio, and affordability constraints for lower-income subscribers could limit further pricing actions. The company's debtors turnover ratio for H1 FY26 declined to 21.84 times, the lowest in recent periods, suggesting potential collection challenges or extended credit terms in certain customer segments.
| Company | P/E (TTM) | P/BV | ROE (Avg) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Bharti Airtel | 36.09x | 9.64x | 15.49% | 1.56x | 0.80% |
| Bharti Hexacom | 50.90x | 13.16x | 12.71% | 1.00x | 0.61% |
| Tata Communications | 36.53x | 15.51x | 188.12% | 4.52x | 1.61% |
| Railtel Corporation | 32.68x | 5.03x | 13.52% | -0.12x | 0.85% |
| Vodafone Idea | NA (Loss Making) | -1.48x | 3.89% | -2.79x | — |
Industry Leadership: Valuation Premium Reflects Market Dominance
Bharti Airtel commands a market capitalisation of ₹11,48,575 crores, making it the largest company in the Telecom - Services sector and one of India's most valuable corporations. The company's P/E ratio of 36.09 times trailing twelve-month earnings trades marginally below the industry average of 37 times, suggesting reasonable valuation relative to sector peers despite the company's superior market position and operational metrics.
The price-to-book value ratio of 9.64 times appears elevated compared to peers like Railtel Corporation (5.03 times) but remains below Bharti Hexacom (13.16 times) and Tata Communications (15.51 times). This premium valuation reflects investor confidence in Bharti Airtel's sustainable competitive advantages, including network quality, brand strength, distribution reach, and financial stability. The company's ROE of 15.49% justifies a higher P/BV multiple, as it demonstrates the ability to generate superior returns on book value.
Bharti Airtel's dividend yield of 0.80% trails the sector, with the company paying ₹16 per share as the latest dividend (ex-date: July 18, 2025). The dividend payout ratio of 61.64% indicates a balanced approach to capital allocation, returning cash to shareholders whilst retaining sufficient earnings for network investments and debt reduction. However, the relatively low yield may disappoint income-focused investors, particularly when compared to fixed-income alternatives.
Valuation Analysis: Expensive Rating Reflects Premium Multiples
At the current market price of ₹1,992.05, Bharti Airtel carries an "Expensive" valuation grade, having oscillated between "Fair" and "Expensive" over the past year. The stock trades at 36.09 times trailing earnings, 9.64 times book value, and an enterprise value-to-EBITDA multiple of 12.11 times. Whilst these multiples appear elevated in absolute terms, they must be evaluated in the context of the company's market leadership, consistent revenue growth, and improving profitability metrics.
P/E Ratio (TTM)
Price to Book Value
Dividend Yield
EV/EBITDA
The PEG ratio of 0.30 suggests the stock may offer value when growth prospects are factored into the valuation framework. With five-year EBIT growth of 37.60%, the company's earnings growth trajectory justifies a premium multiple, particularly as the sector transitions from capital-intensive expansion to cash generation and margin improvement. However, investors must weigh this growth potential against execution risks, regulatory uncertainties, and competitive pressures.
The stock's 52-week range of ₹1,561.00 to ₹2,174.70 provides context for current valuation. At ₹1,992.05, the stock trades 8.40% below its 52-week high and 27.61% above its 52-week low, suggesting consolidation after a strong rally. The stock's distance from its 200-day moving average of ₹1,965.12 indicates it remains above long-term trend support, although recent price action has been sideways following a "Mildly Bullish" to "Sideways" trend change on January 29, 2026.
Shareholding Pattern: Promoter Dilution Continues as FII Interest Builds
Bharti Airtel's shareholding pattern reveals a continuing trend of promoter dilution alongside rising institutional participation. Promoter holding declined to 48.87% in Q3 FY26 from 50.27% in Q2 FY26, marking a 1.40 percentage point sequential reduction. Over the past year, promoter stake has decreased from 53.11% in December 2024, reflecting ongoing equity infusions or stake sales to fund capital requirements and deleveraging initiatives.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 48.87% | 50.27% | 51.25% | 52.42% | -1.40% |
| FII | 28.76% | 27.42% | 26.72% | 25.42% | +1.34% |
| Mutual Funds | 11.36% | 11.32% | 11.10% | 10.97% | +0.04% |
| Insurance | 6.04% | 6.10% | 6.22% | 6.53% | -0.06% |
| Other DII | 2.26% | 2.10% | 1.89% | 1.85% | +0.16% |
| Non-Institutional | 2.72% | 2.79% | 2.81% | 2.82% | -0.07% |
Foreign institutional investor (FII) holding increased to 28.76% in Q3 FY26 from 27.42% in Q2 FY26, representing a 1.34 percentage point sequential gain. Over the past year, FII stake has expanded from 24.27%, signalling growing international investor confidence in India's telecommunications sector and Bharti Airtel's competitive positioning. With 2,028 FII holders, the stock enjoys broad-based foreign participation, reducing concentration risk.
Mutual fund holding remained relatively stable at 11.36% in Q3 FY26, up marginally from 11.32% in Q2 FY26, with 48 mutual fund schemes holding positions. Insurance company holdings declined slightly to 6.04% from 6.10%, whilst other domestic institutional investors (DII) increased their stake to 2.26% from 2.10%. The overall institutional holding of 48.41% provides strong support for the stock, although the declining promoter stake may raise questions about long-term commitment or financial flexibility.
Stock Performance: Outperformance Driven by Sector Leadership
Bharti Airtel's stock has delivered exceptional long-term returns, significantly outperforming broader market indices across multiple time horizons. Over the past three years, the stock generated returns of 151.19% compared to the Sensex's 36.94%, producing alpha of 114.25 percentage points. The five-year return of 242.72% versus the Sensex's 64.22% demonstrates sustained outperformance, with alpha of 178.50 percentage points.
| Period | Bharti Airtel Return | Sensex Return | Alpha | Sector Return |
|---|---|---|---|---|
| 1 Week | +1.21% | +0.91% | +0.30% | — |
| 1 Month | -5.34% | -2.49% | -2.85% | — |
| 3 Months | -5.72% | -0.17% | -5.55% | — |
| 6 Months | +3.23% | +3.23% | +0.00% | — |
| YTD | -5.40% | -2.24% | -3.16% | — |
| 1 Year | +20.04% | +6.44% | +13.60% | +21.71% |
| 2 Years | +78.86% | +16.15% | +62.71% | — |
| 3 Years | +151.19% | +36.94% | +114.25% | — |
| 5 Years | +242.72% | +64.22% | +178.50% | — |
However, recent performance has been more subdued. The stock declined 5.34% over the past month and 5.72% over three months, underperforming the Sensex by 2.85 and 5.55 percentage points respectively. Year-to-date returns of -5.40% trail the Sensex's -2.24%, whilst the one-year return of 20.04% marginally underperformed the Telecom - Services sector return of 21.71% by 1.67 percentage points.
The stock's beta of 0.89 indicates lower volatility than the broader market, with risk-adjusted returns of 1.01 over the past year compared to the Sensex's 0.56. The volatility of 19.91% remains manageable for a large-cap stock, whilst the positive Sharpe ratio suggests favourable risk-adjusted performance. The stock currently trades below its 5-day, 20-day, 50-day, and 100-day moving averages, reflecting recent price weakness and consolidation following the trend change to "Sideways" on January 29, 2026.
Investment Thesis: Quality Company at Premium Valuation
Bharti Airtel's investment thesis rests on four pillars: market leadership in a consolidated industry, improving return ratios, strong cash generation, and pricing power. The company's overall quality grade of "Average" reflects solid long-term financial performance, although this represents a downgrade from the "Good" rating maintained prior to August 2025. The financial trend remains "Positive" as of December 2025, supported by highest-ever quarterly revenue, operating profit, and ROCE metrics.
Valuation Grade
Quality Grade
Financial Trend
Technical Trend
The technical trend of "Sideways" since January 29, 2026, reflects near-term uncertainty following a period of strong price appreciation. Weekly and monthly technical indicators show a mix of mildly bearish signals (MACD, KST, Dow Theory, OBV) and bullish signals (Bollinger Bands on monthly timeframe), suggesting indecision amongst market participants. The stock's delivery volume has surged 54.15% over the trailing one-month period compared to the previous month, indicating accumulation by long-term investors despite price consolidation.
Key Strengths & Risk Factors
KEY STRENGTHS
- Market Leadership: Largest telecom operator by market capitalisation (₹11.49 lakh crores) with 550+ million customers across 17 countries
- Margin Expansion: Operating margin improved to 57.02%, highest quarterly level, reflecting pricing power and operational efficiency
- Improved ROCE: Half-yearly ROCE of 19.46% represents highest level, demonstrating better capital efficiency and asset utilisation
- Deleveraging Progress: Debt-to-equity ratio improved to 1.77 times (H1 FY26), lowest in recent periods, with long-term debt declining to ₹1.05 lakh crores
- Strong Cash Generation: Operating cash flow of ₹98,332 crores in FY25, up 24.6% year-on-year, supports network investments and debt reduction
- High Institutional Confidence: Institutional holdings at 48.41% with rising FII participation (28.76%, up from 24.27% a year ago)
- Consistent Revenue Growth: Five-year sales CAGR of 15.68% and EBIT CAGR of 37.60% demonstrate sustained business momentum
KEY CONCERNS
- Profit Volatility: Consolidated net profit declined 55.14% year-on-year due to absence of exceptional gains, raising questions about earnings sustainability
- Expensive Valuation: Trading at 36.09x P/E and 9.64x P/BV with "Expensive" valuation grade, limiting upside potential from current levels
- High Leverage: Debt-to-equity ratio of 1.56 times (average) and debt-to-EBITDA of 2.80 times indicate elevated financial risk despite deleveraging efforts
- Promoter Dilution: Promoter stake declined to 48.87% from 53.11% over past year, raising concerns about long-term commitment or financial flexibility
- Weak Interest Coverage: EBIT-to-interest ratio of 1.85 times (average) suggests limited cushion for interest obligations if profitability deteriorates
- Regulatory Uncertainty: Telecom sector faces ongoing regulatory changes, spectrum auction obligations, and potential tariff intervention risks
- Collection Challenges: Debtors turnover ratio declined to 21.84 times (H1 FY26), lowest in recent periods, indicating potential receivables pressure
Outlook: What to Watch in Coming Quarters
POSITIVE CATALYSTS
- Sustained Tariff Discipline: Industry-wide pricing discipline holds, enabling further ARPU expansion without subscriber churn
- 5G Monetisation: Successful rollout of 5G services drives premium pricing and enterprise revenue growth
- Market Share Gains: Continued subscriber additions in premium segments at expense of weaker competitors
- Operating Leverage: Revenue growth translates to margin expansion as network investment intensity moderates
- Deleveraging Acceleration: Strong cash flows enable faster debt reduction, improving financial flexibility and credit metrics
RED FLAGS TO MONITOR
- Tariff Rollback Pressure: Regulatory intervention or competitive pressures force tariff reductions, impacting revenue and margins
- Subscriber Churn: Price-sensitive customers downgrade or switch to competitors, limiting ARPU growth potential
- Rising Capex: Spectrum auction obligations or accelerated 5G rollout increase capital intensity, pressuring cash flows
- Margin Compression: Cost inflation (energy, network maintenance) or competitive investments erode operating margins
- Valuation Correction: Expensive multiples compress if earnings growth disappoints or market sentiment towards telecom sector deteriorates
The coming quarters will be critical in determining whether Bharti Airtel can sustain its margin expansion trajectory whilst navigating the transition from aggressive pricing actions to volume-driven growth. Investors should monitor ARPU trends, subscriber additions in premium segments, enterprise revenue growth, and free cash flow generation after capital expenditure. The company's ability to maintain ROCE above 19% whilst reducing leverage will be key to justifying its premium valuation.
The Verdict: Quality Operator, But Patience Required at Current Valuation
Score: 51/100
For Fresh Investors: Not recommended for fresh buying at current levels. The "Expensive" valuation grade, elevated P/E of 36.09 times, and recent profit volatility suggest limited upside from current price of ₹1,992.05. Wait for a meaningful correction towards ₹1,750-1,800 levels (10-12% downside) or evidence of sustained profit growth normalisation before initiating positions. The stock's sideways technical trend and trading below multiple moving averages indicate consolidation, offering better entry opportunities ahead.
For Existing Holders: Continue to hold with a long-term perspective. Bharti Airtel's market leadership, improving return ratios (ROCE at 19.46%), consistent margin expansion (57.02% operating margin), and strong cash generation (₹98,332 crores operating cash flow in FY25) support the investment thesis. The deleveraging trajectory (debt-to-equity improving to 1.77 times) and rising institutional participation (FII stake at 28.76%) provide confidence. However, monitor quarterly results closely for sustained profit growth and maintain stop-loss at ₹1,850 (7% downside) to protect against valuation correction risks.
Fair Value Estimate: ₹1,850-1,900 (7-10% downside from current levels), implying P/E of 33-34 times, more aligned with sustainable earnings growth and sector fundamentals
Bharti Airtel remains a high-quality telecommunications operator with strong competitive positioning and improving financial metrics, but the current valuation leaves limited margin of safety. The sharp year-on-year profit decline in Q3 FY26, whilst explained by exceptional items in the base quarter, raises questions about earnings sustainability. The company's operational performance remains robust, with highest-ever quarterly revenue and operating margins, but investors should await better entry points or clearer evidence of normalised profit growth before adding exposure.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal.
