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Generally a FTSE 100 progress share pushes all the proper buttons, with out ever fairly capturing the eye of traders. I’d say that’s the case with telecoms operator Airtel Africa (LSE: AAF). Its shares have had an exceptional run not too long ago, up 163% within the final yr and 327% over 5.
But, it nonetheless doesn’t really feel like a go-to progress identify amongst traders. I can’t preach. I haven’t paid it a lot consideration myself. Is it too late to hop on board?
Airtel Africa shares are flying
The rollercoaster retains racing, with the Airtel Africa share value up 18% within the final week alone, the quickest grower on the blue-chip index. It has an enormous market to goal at, as smartphone penetration continues to be solely across the 45% mark. With luck, it ought to develop together with connectivity.
Q1 2025 outcomes, revealed on 25 July, confirmed quartely group income leaping 22.4% to $1.4bn. Knowledge income surged 38.1% whereas cell cash climbed 30.3%, reflecting rising smartphone adoption and elevated monetary inclusion.
Revenue after tax jumped from $31m to $156m, boosted by foreign money features within the Central African franc. Airtel Africa has additionally been rewarding shareholders with share buybacks, returning $16.9m.
A buyer base of 75.6m knowledge customers and 46m cell cash prospects reveals the size of the chance. Its funding in 4G/5G networks, fibre and digital platforms may make it greater than a telecoms operator, probably turning it right into a broader service supplier.
Dangerous FTSE 100 inventory
But the share value has been risky at instances, and foreign money threat stays a priority. The Nigerian naira has had a poor decade, shrinking revenues when transformed into sterling. Recently although, it’s displaying indicators of restoration. Debt is one other concern, it’s nearly doubled to $6.19bn in simply over a yr, because the group invests closely in networks and digital companies. That’s an issue with telecom shares, simply have a look at BT Group and Vodafone.
I see Airtel Africa as one to strategy with excessive warning right now, regardless of the chance. The worth-to-earnings ratio is nudging 60, which is much more costly than the final word FTSE 100 blockbuster inventory, Rolls-Royce. Any slip in earnings or swing in currencies may spook the market
Too late to leap in?
Consensus analyst forecasts put the one-year share value goal just below 225p, round 18% under right now’s ranges. Most of these forecasts received’t mirror current fast progress. However in addition they spotlight a hazard when the inventory races forward of expectations.
Of the 12 analysts masking Airtel Africa, eight identify it a Robust Purchase, one says Purchase and three Maintain. None advocate promoting. That’s a fairly stable endorsement.
I feel it’s price contemplating for traders keen to tackle the danger. But as I mentioned, they need to be cautious. There’s an actual likelihood of a pullback when a share runs this scorching. Perhaps contemplate drip-feeding cash in? Anticipate volatility, be affected person, steadiness this progress alternative with much less risky holdings. Airtel Africa has had an excellent run, however new traders are arriving late to the share value celebration.
