Bharti Airtel has had some tough days since Mukesh Ambani-led Reliance Jio entered the telecom industry.  But, according to a research note by CLSA, it could make the investors rich going ahead. The note highlights key factors that are going to boost Airtel in FY20. Not only this, CLSA has also given a buy target on Airtel. On Friday, the Airtel share was trading at Rs 355.55 per piece down by Rs 1.05 or 0.29% on Sensex. But CLSA has given a target price of Rs 410, which means you can buy Airtel when it is trading at lows. These factors will drive the growth, as per CLSA::

India mobile operations to return to growth:

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4QFY19 would mark the return of growth in Bharti Airtel’s India mobile revenues led by uptrading of subscribers to bundled plans (10m data subscriber additions) and full-quarter impact of minimum recharge plans. While Bharti’s reported India mobile subscribers (paid subscribers) would likely decline by a further 20m, CLSA expect reported Arpus to rise 20% QoQ to Rs125.  These twin factors will drive revenue growth. Driven by a turn in revenues, the report forecast Bharti’s India mobile margins to expand 50bps QoQ to 19.6% driving 3% QoQ growth in mobile Ebitda.

Non-mobile businesses to drag India operations:

Bharti’s 4QFY19 revenues from India operations would likely be flat QoQ despite growth in India mobile business, due to degrowth in non-mobile businesses. Both homes (fixed-line/broadband) and Digital TV (DTH) businesses will see 3% QoQ revenue decline due to rising competition and implementation of TRAI’s new tariff order. India operations Ebitda too is likely to be flat QoQ, with growth in India mobile Ebitda being offset by 3-7% QoQ decline in Homes and Digital TV.

Africa operations to be stable; consol loss

In Africa, CLSA expects Airtel’s operations to remain strong with 2% QoQ revenue growth. In 4QFY19 local currencies in Africa were stable against USD which should help margins be stable QoQ in Africa at 37%. On a consolidated basis (India +Africa), we expect Bharti’s revenues to grow 1% QoQ to Rs209bn and Ebitda to be flat QoQ at Rs63bn. However, the company would report a loss of Rs 13 billion in 4QFY19 on the back of higher depreciation and finance charges.

Thereby, CLSA said, “in addition to Bharti’s sustainable turnaround in India mobile revenues starting 4QFY19, the upcoming Rs320bn capital raising (Rs250bn rights issue plus Rs70bn foreign currency perpetual bonds issue) will:

1) lower Bharti’s loss per share in FY20CL by 44% and boost FY21CL EPS estimates by 42%, (2) lower FY20CL net debt by 30%, and (3) lower its net gearing from 3.9x to 2.8x Ebitda in FY20. Retain BUY on Bharti Airtel with Rs410 target.”

From current market price, Airtel is seen to rise over 15% ahead.