Explained: Why Bharti Airtel shares hit all-time high today

Shares of Bharti Airtel surged 6 per cent to hit an all-time high of Rs 756 on BSE after the company announced tariff hikes on prepaid plans. The Rs 79 plan, for instance, will cost Rs 99 from November 26.
 
“Bharti Airtel has always maintained that the mobile Average Revenue per Unit (ARPU) needs to be at Rs 200 and ultimately at Rs 300, to provide a reasonable return on capital that allows for a financially healthy business model,” the official release read.
 
It further noted that this level of ARPU will help in getting investments for networks and spectrum apart from giving the telecom behemoth “the elbow room to roll out 5G in India.” The plan, which has a validity of 28 days, offers 50 per cent more talk-time at 99 minutes, 200MB data and 1 paise/second voice tariff.
 
The stock opened 4 per cent higher at Rs 743 against the previous close of Rs 714.20 on BSE. With a market capitalisation of more than Rs 4,00,000 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
The large-cap stock has gained 53 per cent in the last one year and has risen 45 per cent since the beginning of this year.
 
"We all know that Indian tariffs are very, very low—lower than most places in the world and even in emerging markets. We are not seeking the $50-70 monthly ARPU the western world enjoys. The fact is that the current tariff levels aren’t sustainable. How far this can go will have to be seen. But yes, I would agree with you that, especially for weaker players, lower tariffs are a very large burden on them to grow," Airtel boss Sunil Bharti Mittal told BusinessToday.In.
 
Bharti Airtel posted 300 per cent quarter-on-quarter (QoQ) growth in net profit for the quarter ended September 30. The bottom line of the telecom major jumped to Rs 1,134 crore from 283.50 crore in the preceding quarter ended June 30. It had reported a loss of Rs 763.20 crore in the same quarter last year.
 
CLSA raised the target price of Bharti Airtel to Rs 860 (Rs 810 earlier) post Q2 results. It added that the company reported better-than-expected financial results in terms of revenue and EBITDA margins. “Led by Bharti’s 4G penetration, at 60 per cent of its own India mobile subscribers, we forecast a 15 per cent consolidated EBITDA CAGR by FY24,” the overseas financial services firm said.
 
HDFC Securities said that the company has completed Rs 21,000 crore ($2.87 billion) rights shares issue to existing shareholders. The fundraising is aimed at helping the company to boost its balance sheet to invest in 5G technologies and expand its existing telecom network to compete with market leader Reliance Jio.
 
“It will also help the company repay adjusted gross revenue related liabilities among other dues. It is expected to roll-out 5G by the second half of FY23,” it added.
 
Jefferies also upped the target price to Rs 860 (from Rs 834 earlier). “Bharti Airtel’s Q2 revenue and EBITDA came in line with expectations while profit beat estimates. Improvement in subscriber mix is a reflection of its network investments,” it said.