Airtel Stock Down 4% After Company Announces Rs 20,000 Crore Capital Infusion Into NBFC Arm

The stock of India’s second-largest telecom company, Bharti Airtel, declined almost 4 percent during the trading session on Tuesday after the company announced that it will infuse significant capital into its NBFC (Non-Banking Financial Company) arm, Airtel Money.

While the stock opened flat on Tuesday compared to its previous close, the scrip fell close to 4 percent from Rs 1,997 to Rs 1,921 apiece.

The decline came as the telecom major on Monday declared that it will infuse capital of Rs 20,000 crore into its NBFC arm. The market reacted negatively to the development as the company said that about 70 percent of the amount would come from Airtel.

“The NBFC subsidiary will be capitalised with Rs 20,000 crore to be injected over the next few years. Airtel will contribute 70%, with the promoter group via Bharti Enterprises Limited bringing in the balance 30%,” it said in a regulatory filing.

It said that Airtel Money has already disbursed over Rs 9,000 crore on the back of “best-in-class delinquency outcomes, driven by robust underwriting models, disciplined portfolio management, and real-time risk monitoring.”

The decision to financially support Airtel Money has been taken after the NBFC recently received its shadow banking licence from the Reserve Bank of India.

According to the company, the formal credit-to-GDP ratio in India is at 53 percent, which highlights the scope for lending in the country.

Airtel’s Executive Vice Chairman, Gopal Vittal, said that the decision to expand the NBFC business reflects the company’s ambition to build a differentiated and future-ready digital lending business.

After a sharp decline on the bourses on Tuesday, the stock of the company, however, regained some losses. Towards the end of the day, it was hovering around Rs 1,939, which is 2.9 percent lower than the previous closing price.

With a market capitalisation of over Rs 11 lakh crore, Airtel reported revenue of Rs 30,854 crore in the December quarter. The telecom major had a net profit of Rs 4,090 crore during the same period.