Bharti Airtel mulling to raise fund through various options, know why brokerage terms it surprise – Check target price here

Bharti Airtel, India’s second-largest telecom company, is mulling to raise capital through various sources and has intimated the same through a filing to exchanges. In this regard, the global brokerage firm Jefferies terms this fundraising news as a surprise and says it will remain a near-term overhang.

“The Board of Directors of the Company is scheduled on Sunday, August 29, 2021, to inter-alia consider various capital raising options through equity or equity-linked or debt instruments or any combination there-of, as the Board may deem appropriate,” Airtel said on Wednesday. 

The options Airtel lists in its filing are: “Rights issue, qualified institutions placement, preferential issue, convertible instruments issued domestically or foreign currency convertible bonds or warrants on a preferential or marketed basis or straight long-dated debt in rupee or foreign currency.”

Jefferies says, this fundraising to up capacity in anticipation of large market share shifts could be seen positively, however, any stake bought in Indus Towers may be seen negatively. It maintains a Buy rating with market share shifts set to accelerate and sets a price target of Rs 685 per share.

Earlier on Tuesday, the Supreme Court directed the Department of Telecommunication (DoT) not to invoke the bank guarantees of Airtel for three weeks in regards recovering Rs 1,376 crore in AGR-related dues of Videocon Telecom Ltd (VTL), which had sold its spectrum to the Bharti group.

The apex court refusing to entertain Airtel's plea that VTL dues are not payable by it, had permitted the telecom major to approach the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) with the grievances. 

The shares of Airtel have been trading near life high levels since the ongoing concern of Vodafone Idea increases. The stock on Wednesday ended over 1 per cent lower to Rs 612.45 per share on the BSE as compared to a 0.03 per cent fall in the S&P BSE Sensex.

The stock earlier last week on August 16, 2021, had touched a new life high of Rs 644 per share on the BSE.