Bharti Airtel surges 5% on hopes of weightage increase in MSCI indices

Shares of Bharti Airtel surged 5 per cent to Rs 610 on the BSE on Friday after the global index provider MSCI said it will take a decision on increasing the weightage of the telecom services provider at upcoming index review in February. The stock was trading close to its record high level of Rs 612, touched on May 20, 2020.

On Tuesday, Bharti Airtel had announced that it has received required regulatory approvals for 100 per cent foreign direct investment (FDI) in its downstream companies. The company said it is initiating the process to revise its foreign investment limit to 100 per cent, with immediate effect.

As of January 12, 2021, National Securities Depository Limited (NSDL) updated the foreign investment limit for Bharti Airtel from 49 per cent to 100 per cent. As a reminder MSCI reviews Foreign Ownership Limit (FOL) and foreign room until the price cutoff date on a quarterly basis.

“The proforma FOL and upward movement of the adjustment factor due to foreign room will be implemented as part of the upcoming February 2021 Quarterly Index Review (QIR). The proforma Foreign Inclusion factor (FIF) will be announced along with the scheduled February 2021 QIR announcement, on February 9, 2021. All changes will be implemented as of the close of February 26, 2021 (effective March 1, 2021),” the index provider said in an announcement.

Post revision of its foreign investor limit, its weightage in MSCI should go up, resulting in significant inflows into the stock, ICICI Securities said in a note.

The brokerage expects Bharti Airtel to lead subscriber addition in the October-December quarter (Q3FY21) aided by Vodafone Idea churn and challenges faced by the new operator due to farmer's protest.

“The reported ARPU (average revenue per user) is likely to witness around 2 per cent QoQ growth at Rs 165, aided by higher data-based usage upgrades. Meanwhile, Indian wireless revenues are expected to witness 5.3 per cent QoQ growth at Rs 14,565 crore. India non-wireless revenues traction may also remain robust, especially broadband and enterprise," the brokerage firm said in result preview.

At 09:32 am, Bharti Airtel was trading 4 per cent higher at Rs 602 on the BSE, as compared to 0.25 per cent decline in the S&P BSE Sensex. A combined around 17 million equity shares had changed hands on the counter on the NSE and BSE, till the time of writing this report.