bharti airtel share price Showing an uptrend since last one month, as Telecom stock has gained momentum ₹from 658 ₹698.7 each (on NSE today at 12:45 pm), registering a growth of around 6 per cent in the period. HDFC Securities is expecting this rally in the telecom stock in the next two quarters.
In its latest report on Bharti Airtel shares, the brokerage has advised investors to include telco stocks in their portfolio when it comes to it. ₹669 to ₹681 range. Brokerage advised to add more on further dips ₹from 605 ₹617 price band.
Highlighting the fundamentals driving Bharti Airtel’s share rally, the HDFC Securities report states, “Bharti Airtel has a healthy customer base and revenue market share with a pan-India network. The numbers have declined, largely driven by the introduction of the Minimum Recharge Scheme, revenue market share rising to 34.9 per cent as of June 30, 2021. Its initiatives such as equity fund raising, and value unlocking in the African subsidiary ( TPG and TPG’s 12 percent stake in Mobile Money for $300 million (Mastercard), Indus Towers and Bharti Telemedia have helped control the debt.”
Further, the company believes that there is a strong case for an increase in tariffs and expects ARPU (average revenue per user) to increase, the brokerage report further said. ₹200/month by the end of FY22 (vs. of ARPU ₹146) in Q1FY22. In the long term, according to management it targets ARPU ₹300/month. Unlike RIL JIO, apart from future 5G rollouts, Bharti has an inherent advantage of larger 2G and 3G customer base (operating at significantly lower ARPU), which will eventually transition to 4G, which will be APRU accretion.
In the last 5 to 7 quarters, Bharti Airtel has raised huge amounts of money in the form of equity and equity linked instruments along with monetization of stake in certain businesses. The telecom company also has a wide reach to the financial markets and a demonstrated track record of raising funds when needed. Recently, the company approved its plan to raise more capital ₹21,000 crore through rights issue.
A number of structural and process reforms were much needed in the telecom sector, approved by the Union Cabinet in September 2021 to help reduce the regulatory burden on Telecom Service Providers (TSPs). Bharti will now be able to defer around Rs 4000 crore towards AGR and around Rs 7500 crore towards spectrum dues in FY 2013E and use it to fund its 5G capex.
“We think investors can buy into the stock ₹669 to ₹681 Bands, and Add on Dips ₹from 605 ₹617 bands. The fair value of the base case stock is ₹733 and the bull case stock has a fair value ₹798,” the brokerage report concluded.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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