70% return in one year: Brokerage suggests buying this large-cap telecom stock, check target

Shares of telecom giant Bharti Airtel rewarded its investors with a return of almost 70 per cent in one year. If you have this stock in your portfolio,  should you buy, add, or sell it?

Know what analysts make of this second-largest telecom sector company. Brokerage ICICI Direct is bullish on Bharti Airtel stock from a long-term perspective.

Bharti Airtel - Price Target and Analyst Recommendations

Brokerage ICICI Direct recommends buying the stock at a target of Rs 1,630. The target implies an upside of more than 21 per cent from Tuesday's closing price of Rs 1339.3 each.

Why ICICI Direct is Bullish on Bharti Airtel

According to the brokerage, Bharti Airtel has a strong wireless business. The company leads in key metrics such as ARPU, with a 7.8 per cent growth in FY24, and India margins of 53.8 per cent, outperforming Jio.

"With 5G expansion done, operators will focus on ARPU and RoCE improvements. Around 20 per cent tariff hike is expected in Q2FY25, leading to a projected 13 per cent CAGR in Airtel’s ARPU over FY24-26E and a 300 bps margin improvement by FY26," the brokerage said.

However, delay in tariff hikes is one of the significant risk factors. The brokerage informed that another risk to be cognizant of is the potential escalation in competitive intensity following the revival of VI (Vodafone Idea).

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What market wizard Anil Singhvi says

Zee Business Managing Editor Anil Singhvi has an 'overweight' rating on the telecom sector. Singhvi suggests investors consider allocating a significant portion of their portfolios to it for the next two years.

He also highlighted the significance of telecom players in driving India's digital transformation, emphasising the sector's pivotal role as the highest data consumption globally. With the imperative to maintain economic growth, particularly in technology and digital payments, he underscored the critical importance of telecom infrastructure networks.

Singhvi also pointed out the competitive edge of telecom giants like Bharti Airtel, Vodafone Idea, and Reliance Jio. However, he sees telecom sectors as opportunities, not obstacles despite the present challenges—like pricing issues and uncertain regulations.

Bharti Airtel Share Price History

The company's shares jumped over 4 per cent in the last week, 40 per cent in six months, 33 per cent so far this year, and almost 70 per cent in one year.

Bharti Airtel's stock ended at Rs 1339.3 today, down 0.66 per cent. Despite the decline, the telecom giant remains a key market participant, demonstrating resilience in the face of changing trends.