• by Stocktry Expert
• 18th Nov 2020

The Upside of 40% in Telecom Service Share

Predicting the upside of 40% from the current market price in the next year, Analyst highly recommends Bharti Airtel. Listed among the world's largest telecommunications companies, Delhi-based Bharti Airtel offers mobile, broadband, digital TV solutions, and mobile commerce to over a million customers globally.

Further, with the launch of Airtel IQ for enterprises and small-medium enterprises, Bharti Airtel aims to tap a billion-dollar cloud communications market with a strategic stake in Wayebeo, a tech startup, to scale up its cloud offerings. Bharti Airtel and Amazon Web Services have also announced a collaboration agreement to offer cloud solutions to large and small enterprises. Bharti Airtel's ARPU (Average revenue per user) has consecutively risen for four straight quarters, stirring the Analyst.

Various reporters and Analysts favor the Bharti enterprise, telecom services. I Diwali Picks - Samvat 2077 report, Motilal Oswal said, "Bharti’s execution has been top-notch in the last few quarters, evident from strong 16% India Mobile EBITDA growth cumulatively in the last two quarters. Robust 10m subscriber adds lead to cumulative ARPU improvement of 5%." Motilal Oswal has kept the target at ₹650.

HDFC also recommended commenting, "An increase in ARPU (though timing is uncertain) may lead to a significant upgrade in EBITDA as the tariff hike may change subscriber addition dynamics and elasticity of demand. ARPU stood at ₹162 in Q2FY21, vs. ₹128 in Q2FY20, We expect to see ARPU at a range of ₹165-170 in FY21E and ₹175- 180 in FY22E." HDFC Securities has put a target price of 597.

While HDFC securities said, "Company has cash and equivalents of over ₹22,700 crore as on Sept 30, 2020. Improving cash accrual could sufficiently cover maturing debt of ₹13,900 crore in FY21. "We expect capex to be moderate at ₹20,000-22,000 crore per fiscal over the medium term. Furthermore, relief towards payment timelines on AGR dues could help to maintain liquidity at current levels."

Among others, Dolat Research has kept the target at ₹605 per share.

Currently, a share of Bharti Airtel is trading at ₹480. In last 1 year Bharti Airtel Ltd, has beaten Nifty 50 by 25.18% (CAGR difference).