Up 165% in a year! Is it time investors woke up to this eye-popping growth share?
Sometimes a FTSE 100 growth share pushes all the right buttons, without ever quite capturing the attention of investors. I’d say that’s the case with telecoms operator Airtel Africa (LSE: AAF). Its shares have had a phenomenal run recently, up 163% in the last year and 327% over five.
Yet, it still doesnât feel like a go-to growth name among investors. I can’t preach. I havenât paid it much attention myself. Is it too late to hop on board?
Airtel Africa shares are flying
The rollercoaster keeps racing, with the Airtel Africa share price up 18% in the last week alone, the fastest grower on the blue-chip index. It has a huge market to aim at, as smartphone penetration is still only around the 45% mark. With luck, it should grow along with connectivity.
Q1 2025 results, published on 25 July, showed quartely group revenue jumping 22.4% to $1.4bn. Data revenue surged 38.1% while mobile money climbed 30.3%, reflecting growing smartphone adoption and increased financial inclusion.
Profit after tax jumped from $31m to $156m, boosted by currency gains in the Central African franc. Airtel Africa has also been rewarding shareholders with share buybacks, returning $16.9m.
A customer base of 75.6m data users and 46m mobile money customers shows the scale of the opportunity. Its investment in 4G/5G networks, fibre and digital platforms could make it more than a telecoms operator, potentially turning it into a broader service provider.
Risky FTSE 100 stock
Yet the share price has been volatile at times, and currency risk remains a concern. The Nigerian naira has had a poor decade, shrinking revenues when converted into sterling. Lately though, itâs showing signs of recovery. Debt is another issue, it’s almost doubled to $6.19bn in just over a year, as the group invests heavily in networks and digital services. That’s a problem with telecom stocks, just look at BT Group and Vodafone.
I see Airtel Africa as one to approach with extreme caution today, despite the opportunity. The price-to-earnings ratio is nudging 60, which is even more expensive than the ultimate FTSE 100 blockbuster stock, Rolls-Royce. Any slip in earnings or swing in currencies could spook the market
Too late to jump in?
Consensus analyst forecasts put the one-year share price target just under 225p, around 18% below todayâs levels. Most of those forecasts won’t reflect recent rapid growth. But they also highlight a danger when the stock races ahead of expectations.
Of the 12 analysts covering Airtel Africa, eight name it a Strong Buy, one says Buy and three Hold. None recommend selling. That’s a pretty solid endorsement.
I think itâs worth considering for investors willing to take on the risk. Yet as I said, they should be cautious. There’s a real chance of a pullback when a share runs this hot. Maybe consider drip-feeding money in? Expect volatility, be patient, balance this growth opportunity with less volatile holdings. Airtel Africa has had a brilliant run, but new investors are arriving late to the share price party.
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Harvey Jones has positions in Rolls-Royce Plc. The Motley Fool UK has recommended Airtel Africa Plc, Rolls-Royce Plc, and Vodafone Group Public. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
