Bharti Airtel surges 7%, hits over six-month high

The favourable industry structure of two players is a good enough kicker for an eventual hike in tariff as well as superior digital play in the medium to long term, an analyst said

Shares of Bharti Airtel hit an over six-month high of Rs 614 as they rallied 7 per cent on the BSE in intra-day trade on Thursday, in an otherwise range-bound market, as analysts believe the favourable industry structure of two players is a good enough kicker for an eventual hike in tariff as well as superior digital play in the medium to long term. The stock of the telecom services provider was trading at its highest level since February 11, 2021. It had hit a 52-week high of Rs 623 on February 4, 2021. In comparison, the S&P BSE Sensex was up 0.05 per cent at 54,396 points at 12:10 pm.

In the past three weeks, the stock has surged 17 per cent, as compared to a 2.3 per cent rise in the S&P BSE Sensex. Last month, the Supreme Court (SC) dismissed the application of telecom companies that sought recomputation Adjusted Gross Revenue (AGR) dues demanded by the Department of Telecommunication (DoT).

Bharti Airtel is India’s second-largest telecom operator, with a revenue market share of 35 per cent as of Q4FY21. The company has 321 million wireless customers in India and 121 million subscribers across operations in 14 African countries. It enjoys industry-leading ARPU (average revenue per user) and margins in the wireless business.

“Bharti Airtel continues to report resilient numbers, especially on the Indian wireless business front. The strong margins traction and decent 4G net adds is a key positive. The non-wireless business momentum along with Africa performance continues to be robust. We see a 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,” an analyst at ICICI Securities said in Q1FY22 result update.

Further, Motilal Oswal Financial Services said: We 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 5x to the Africa business, arriving at SOTP-based target price of Rs 720. Our estimates do not factor in any upside from tariff hikes or sharp market share gains, potentially due to VIL’s eventual outcome of financial stress.

Meanwhile, Kumar Mangalam Birla has stepped down as non-executive director and non-executive chairman of Vodafone Idea, the company said on Wednesday. Himanshu Kapania, a nominee of the Aditya Birla Group, has been appointed as the non-executive chairman, Vodafone Idea Ltd (Vi) said. The changes come at a time when Vi is struggling to stay afloat.

In another development, Vodafone Plc, which owns 45 per cent stake in Vi, is ready to offer its stake for free to Indian banks/financial institutions or to the government-owned Bharat Sanchar Nigam (BSNL), provided they take over the wireless telephony company, banking sources told Business Standard. CLICK HERE FOR FULL REPORT