Bharti Airtel hits 7-week high; shares surge 4% on heavy volumes

Bharti Airtel shares surged 4 per cent to Rs 1,677.05 on December 13, 2024, hitting a seven-week high. The stock traded at its highest level since October 28, reflecting investor confidence amid positive market sentiment. As of 12:25 PM, the telecom provider’s shares had exchanged hands 2.48 million times, marking a significant jump in trading volume, as compared to the typical 2 lakh shares traded over the past two weeks.

Key developments driving the surge
The stock's rise follows recent announcements, including the approval by the Special Committee of Directors for Fund Raising to allot 1 million equity shares at Rs 515 per share. This allocation relates to the conversion of Foreign Currency Convertible Bonds (FCCBs), which can be converted into stock by bondholders. FCCBs are a common instrument for raising funds from international markets.

Bharti Airtel’s strong 2024 performance
In 2024, Bharti Airtel has outperformed the broader market, rising by 65%, driven by expectations of higher earnings and cash flows. This surge is largely due to the industry-wide mobile tariff hikes in India. In comparison, the BSE Sensex gained just 13% during the same period. Analysts foresee this positive trend continuing as the company benefits from a growing mobile user base and increased adoption of its broadband and digital services.

Positive outlook from ratings agencies
S&P Global Ratings revised Bharti Airtel’s outlook to positive, projecting an 18-20% increase in earnings before interest, tax, depreciation, and amortization (EBITDA) from its Indian operations in fiscal 2025. The ratings agency expects further growth in the home and enterprise segments due to increased uptake of home broadband and enterprise digitalization services.

Future prospects
ICICI Securities has a "Buy" rating on Bharti Airtel with a target price of Rs 1,875, citing strong fundamentals and favourable market conditions. Analysts expect Bharti's EBITDA growth to moderate slightly, but the company’s strong free cash flow (FCF) and improving return ratios provide a solid foundation for continued growth.