Bharti Airtel stock top Sensex gainer; brokerages maintain ‘Buy’ call, check target price

harti Airtel’s share price has jumped 16.8% so far this year, outperforming the benchmark NSE Nifty 50 by a slender margin. (Image: REUTERS)

Bharti Airtel’s share price soared 6.9% on Thursday, hitting an intra-day high of Rs 614 per share to be the top Sensex gainer. The telecom major recently reported its April-June quarter results where the company recorded a net profit of Rs 284 crore against a net loss in the same period a year ago. Airtel’s revenue grew 15.3% from the previous year to Rs 26,854 crore during the first quarter ended June 30. Bharti Airtel’s share price has jumped 16.8% so far this year, outperforming the benchmark NSE Nifty 50 by a slender margin.

During the first quarter, Bharti Airtel’s Average Revenue Per User (ARPU) inched up and came in at Rs 146 per share, significantly higher than Reliance Jio’s Rs 138 per user. The company said the year-on-year rise in ARPU is an outcome of its focus on acquiring quality customers as well as secular upgrading of customers to data.

CLSA – Buy

Target price – Rs 730 per share

CLSA said that Bharti Airtel’s mobile data traction remained strong despite the second wave of the Covid-19 pandemic while the home broadband subscribers had the highest-ever additions. Going forward the brokerage firm believes that the latest entry prepaid tariff hike will likely impact 55 million of 321 million subscribers and boost India mobile revenue/Ebitda 4-7%, in addition to 1-2% from recent postpaid-plan changes. “We await Bharti tariff hikes in prepaid data plans; our estimates factor in 10% tariff hikes in 2HFY22. Led by Bharti’s 4G penetration at 57% of its own India mobile subscribers, Arpu growth and Africa growth, we forecast a 17% Cagr in consolidated Ebitda by FY23,” they added. CLSA values Bharti Airtel’s mobile operations at a 10x EV/Ebitda multiple and ascribes a 9x multiple to non-tower operations.

Motilal Oswal – Buy

Target price – Rs 720 per share

Bharti Airtel had high capex toward network investments in India and paid dues towards a deferred spectrum liability for spectrum acquired from the recent auction, resulting in a negative FCF and higher leverage, analysts at Motilal Oswal highlighted. “Bharti Airtel’s superior execution quality is reflected in its strong performance over the last four quarters (consolidated EBITDA growth of 30% on-year despite no tariff hikes) as well as consistent subscriber and revenue market share gains,” the brokerage firm said. Analysts said that they see a potential re-rating upside in both the India and Africa businesses on the back of steady earnings growth. “We value BHARTI on FY23E, assigning EV/EBITDA of 11x to the India Mobile business and 05x to the Africa business, arriving at SOTP-based TP of Rs 720,” Motilal Oswal said while adding that they have not factored in any upside from tariff hikes or sharp market share gains.

ICICI Direct – Buy

Target price – Rs 720 per share

ICICI Direct believes that the strong margins traction and decent 4G net adds is a key positive for Bharti Airtel. “The non-wireless business momentum along with Africa performance continue to be robust. We see the favourable industry structure of three players (two being strong), a good enough kicker for an eventual hike in tariff as well as superior digital play in medium to long term,” they added. ICICI Direct has hiked the target price from Rs 690 per share earlier.

(The stock recommendations in this story are by the respective research and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)