Value Pick: Brokerages see up to 18% upside in Bharti Airtel shares; know triggers here

From fundraising through rights issue to strategic partnership with Google, Bharti Airtel is termed as a best bet for bumper returns by several brokerages. Airtel has an operation in 18 countries across Asia and Africa and ranks amongst the top 3 mobile service providers globally in subscribers.  

The company gives 2G, 3G and 4G wireless services, mobile commerce, fixed line services, high-speed home broadband, DTH, enterprise services including national and global long-distance services to carriers. 

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Religare Broking 

Bharti is best placed in the industry given its strong execution capabilities and wide subscriber base. The brokerage believe that it can get a re-rating further on the back of anticipated improvement in financial performance due to higher ARPU (average revenue per user) benefit, strong customer base, addition of 4G subscribers and improved traction in other businesses.  

Moreover, strong cash flow generation would aid deleveraging of the balance sheet and also allow investment in new technology.  

Geojit Financial 

With industry’s leading ARPU, recent tariff increases and company’s ability to generate healthy Free Cash Flows along with transformation of business from just telecom to “Digital business end-to-end” and partnership agreements with Google and Hughes, the brokerage see a great potential in the business.  

Maintaining a positive long-term outlook, the brokerage reiterates Buy rating on the stock with a rolled forward target price of Rs 788 per share, implies an upside of around 9 per cent. 

Nomura 

The global brokerage firm highlighted that Bharti is in a well hedged position to gain from either market consolidation (duopoly) or market repair (sharper tariff hikes, further relief measures). 

It said, the company’s rights issue, recent strategic tie-up with Google, cashflow relief from the moratorium on government dues, along with over Rs 200 bn in annual free cashflow generation over FY21-25F, not only alleviate debt concerns, but also ensure that Bharti would be well-placed to compete with R-Jio.  

Nomura reiterates Buy on Bharti with a target price of Rs 855 per share, implying 18 per cent upside. The stock currently trades at 7.5x FY23F EV/EBITDA (EBITDA of Rs 702 bn) 

The stock on Thursday closed over 1.5 per cent higher to Rs 724 per share on the BSE, as compared to 1.84 per cent rise in the S&P BSE Sensex.