Shares of Bharti Airtel Ltd were in focus today after global brokerage Jefferies upgraded the telco to a тАШbuyтАЩ with a target price of Rs 900. The Airtel stock was trading flat at Rs 773.20 in early trade even as the Sensex crashed 683 points to 59,123 and Nifty slipped 179 pts to 17,409. Airtel shares closed at Rs 773.85 in the previous session.The stock is down 4.15 per cent this year. In a year, the Airtel stock has risen 11%. Airtel stock opened on a flat note at Rs 773 today.
Bharti Airtel market cap slipped to Rs 4.31 lakh crore in the current trading session. Total 4.31 lakh shares changed hands amounting to a turnover of Rs 3.24 crore on BSE.
In terms of technicals, the relative strength index (RSI) of Bharti Airtel stands at 52.3, signaling it’s trading neither in the overbought nor in the oversold zone. Bharti Airtel stock has a one-year beta of 0.8, indicating very low volatility during the period. The telecom stock was trading higher than the 5 day, 20 day and 200 day moving averages but lower than 50 day and 100 day moving averages.
The stock hit a 52-week high of Rs 877.10 on November 25, 2022 and a 52-week low of Rs 629.05 on July 14, 2022.
Global brokerage Jefferies believes that market share gains for the telco are likely to accelerate amid 5G rollouts. Market share gains among 4G subscribers, hikes in voice tariffs and improving tariff outlook due to govtтАЩs support for Vodafone Idea are among the key factors which could lead to a 16 per cent upside in the stock from the current levels, said the brokerage.
The above factors can help Bharti drive 13% growth in its mobile ARPUs over FY23-25, said Jefferies.
“While we cut our estimates by 1-4% to factor tariff hike delays, we upgrade Bharti Airtel shares’ rating to BUY as, after a 13% fall since November 2022, the stock offers 16% upside potential to our rolled forward target price of Rs 900 (earlier Rs 850). We cut our revenue/EBITDA estimates by 1-4% to factor the change in tariff assumptions and expect 16-17% Cagr in Bharti Airtel’s consolidated revenue/Ebitda over FY23-25,” the note stated.
BhartiтАЩs market share gains among active 4G users is evident from its 60% incremental market share in 2HCY22 against its overall market share of 30%.
This has helped Bharti Airtel improved its subscriber mix and raise its daily ARPU by 4.4% over 2HCY22. With another 107m voice subscribers on its network yet to upgrade to data, Bharti’s ARPUs will likely rise by 4-5% annually due to the improvement in subscriber mix, it added.
A delayed tariff hike is the key risk to JefferiesтАЩ recommendation.
тАЬVIL may potentially be able to secure incremental funding given Govt’s support but this is unlikely to match Bharti/Jio’s capex plans of $9/25bn over the next three years. Furthermore, VIL is likely to witness accelerated market share losses as 5G becomes mainstream. Initials signs are already visible in recent market share trends where in VIL has lost 3 ppt market share in metro circles in 3QFY23. Per our calculations, Bharti’s fair value could rise by Rs 120/share in a duopoly,” it added.
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