stock market today Telecom shares have been rallying for the past two days on speculation that some relief was announced in AGR (Adjusted Gross Revenue) dues payment. Telecom major Bharti Airtel’s share price has risen nearly 5 per cent in the last two days, while Vodafone Idea shares have gained nearly 40 per cent in the last 5 trading sessions. According to experts, if a relief package is announced for the sector, then it will be a big positive trigger for the entire telecom sector.
Santosh Meena, Head of Research, Swastika Investmart Ltd. said, “Telecom stocks have been bullish for the last two days before the cabinet meeting as a relief package for the sector is expected to be announced. will be a huge positive trigger for
Echoing the views of Santosh Meena, Avinash Gorakshakar, Head of Research, Profitmart Securities said, “The Government of India has recently given permission to manufacture telecom hardware equipment like optic fiber cables, routers, modems etc., thereby enabling 5G roll out in India. It has become easier to make. This has given rise to telecom hardware stocks like Tejas Networks, Sterlite Tech etc. Also, the market believes that relief in AGR dues will be a big boost for telcos, especially Vodafone Idea Some relief in AGR dues payment is strongly anticipated.”
Avinash Gorakshakar of Profitmart Securities said that even though relief in AGR dues is not announced, shares of telecom hardware companies like Tejas Networks and Sterlite Technologies are expected to move higher as they are in the telecom hardware business. He said that Bharti Airtel has already announced to increase the tariff and achieved ₹200 ARPU from the current surrounding ₹145 ARPU (Average Revenue Per User).
“So Reliance Jio is expected to follow suit and in that case the market is assessing whether Reliance Jio will come around to ARPU or not” ₹from 160 ₹170. Hence the valuations of these two telcos have gone up on Dalal Street and they will continue to move upwards even if there is no announcement of relief in AGR dues.”
Asked about telecom stocks whether relief in AGR dues can be announced, Santosh Meena of Swastika Investmart said, “Both Reliance and Bharti Airtel have seen breakouts for several months, hence the momentum in the coming days.” The momentum is likely to continue.”
He added that Vodafone Idea may see major volatility due to its high beta nature, but the position is still weak for this counter as there is a good chance that the sector is heading towards a monopoly so investors should choose between the top two players. It is recommended to stay together.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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