ICICI Direct recommended hold rating on Bharti Airtel with a target price of Rs 400 in its research report dated June 06, 2019.
ICICI Direct's research report on Bharti Airtel
Bharti Airtel (Bharti) seemed to have ticked all the right boxes, notwithstanding continued challenges on pricing in the industry. We note that Q4FY19 marked a return of Indian wireless growth (on a like-to-like basis) after almost 12 quarters, clearly signifying wireless revenue has finally stabilised. The recent rights issue, Africa stake sale and proposed IPO are likely to provide the interim cash flow support as well as leverage breather, till the industry pricing improves from here. With comfortable leverage levels, relative to peers, post rights issue and Africa monetisation, Airtel remains one of the better placed telecom operators.
Outlook
We also bake in IUC impact as well as improvement in ARPU led by post-paid price hike. Post ~15% run up in stock price since our last update, we now assign a HOLD rating (vs. Buy earlier) with a revised target price of Rs 400 (based on DCF based methodology). Quicker industry repair and inability of new player to deleverage remains an upside risk to our call.
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