Bharti Airtel share price jumped over 2 per cent to Rs 719 apiece on the BSE intraday during Wednesday’s trading session after the company reported in-line June-quarter results in the current fiscal as per several brokerages. Brokerages are bullish on the stock as they see upside of up to 31 per cent.
The telecom major reported a steady quarter with a healthy 3 per cent quarter-on-quarter (QoQ) consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) growth that translated into a strong FCF (free cash flow) generation and deleveraging, Motilal Oswal said.
The healthy growth was aided by India Mobile/Africa EBITDA growth of 5 per cent each on the back of sound ARPU (Average Revenue Per User) improvement, the brokerage added.
Motilal Oswal expects better valuation multiple for the stock given a consistent 20 per cent growth opportunity, low concern on 5G, and the company turning profitable with high 50 per cent plus growth due to operating leverage.
The brokerage also sees potential upsides for both India and Africa businesses aided by steady earnings growth and value Airtel on FY24E, assigning 11x EV/EBITDA. It maintained a Buy rating with a target price of Rs 910 per share, implying over 29 per cent upside.
On the recent 5G spectrum bids, the management justified not bidding for the expensive 700 MHz spectrum as the company has sufficient quantum of mid-band spectrum which will give seamless 5G experience on non-standalone architecture, another domestic brokerage JM Financial said.
It maintained a Buy rating with a revised target of Rs 920 per share (nearly 31% upside), expecting tariff hikes to be more frequent, going forward, with Jio more willing to participate in tariff hikes given that it also needs to start focussing on profitability.
Similarly, Kotak Institutional Equities said, Airtel reported a strong operational print in 1QFY23; reported results were in line with our estimates reflecting a healthy performance across segments.
The brokerage reiterated a BUY rating on the stock with a revised target price of Rs 830 per share (almost 18% upside), expecting the company to benefit from—an improvement in industry health underpinned by rising ARPUs, improvement in subscriber mix and 5G rollout, which will propel Bharti’s several digital/enterprise initiatives.