5G Effect? Bharti Airtel shares hit all-time high; what should retail investors do now? Here's what 2 brokerages say

When it comes to consistent performance, only a few stocks can maintain their momentum in the midst of volatile markets, and Bharti Airtel is one of them. Over the last four months, the stock has witnessed almost one-way rally by jumping from around ₹640 levels to the current level of ₹815, delivering a return of nearly 28%.

During Friday's intra-day trade, the stock hit an all-time high of ₹824.40 on the BSE. The stock rallied for eight consecutive trading days, with the stock price rising from Rs. 766 to Rs. 817, yielding a 6.65% return.  At 1:30 p.m., the stock was trading at ₹815.80, down 0.12% on the BSE.

On October 27, the company’s Africa-based unit Airtel Africa announced a 1.5% decline in its net profit to $330 million for the half-yearly period ended September 30, against $335 million in the year-ago period due to higher foreign exchange and derivative losses of $160 million, ANI reported.

However, the company reported that its total customer base increased by 9.7% to 134.7 million in the first half of the year, owing to increased penetration of mobile data and mobile money services. Its ARPU increased by 7.2% in constant currency, owing primarily to increased usage across voice, data, and mobile money.

The operating profit of Airtel Africa rose 19.1 per cent to $872 million from $732 million, whereas basic earnings per share (USD per cent) rose 3.7 per cent to 7.9.

Meanwhile, at the start of October, Airtel launched its 5G services in eight top cities in India. The company claims to deliver high speeds between 20 and 30 times with a "super-fast" call connect.

According to TRAI data, Bharti Airtel increased its wireless subscriber base by 0.33 million in august. In the wireline segment, Bharti Airtel added 0.12 million subscribers, taking its total base to 6.2 million as of August end.

The company has an active subscriber base of 357.66 million as of August end, up from 356.18 million in July. During August, Bharti Airtel remained at the top with the highest visitor location register subscribers among the telecom players at 98.31%, higher than 97.99% in July.

Domestic brokerage firm Axis Securities, in its recent report, has given a 'buy' call on the stock with a target price of ₹875/share. According to the brokerage, the stock's near-term investment catalysts will be strong 4G conversion rates and solid revenue growth.

While Prabhudas Lilladher also maintained a 'buy' tag on the stock with a target price of ₹1,032/share, signaling a potential upside of 26 per cent from the stock's previous close of ₹817 on Thursday.

The brokerage believes the company is a compelling play on multiple growth opportunities in the emerging digital economy given its strong brand presence across mobile, enterprise business, home services, DTH, and Africa businesses; focus on attracting high-quality, discerning customers for ARPU expansion; and affordable 5G rollout.

The Indian telecom sector is expected to enter into a strong growth phase as wireless revenues will grow at 17.7% CAGR to Rs2.9 trillion over FY22–25E, said the brokerage.

For the first quarter of FY23, Airtel posted nearly a five-fold jump in its consolidated net profit at ₹1,607 crore as against ₹284 crore in the year-ago period. The ARPU for the quarter came in at ₹183, compared to ₹146 in the same quarter of the previous fiscal.

The company's EBITDA margin jumped to 50.6%, an expansion of nearly 150 basis points YoY. During the first quarter, the debt-equity ratio improved to 1.28x from 1.36x in the preceding quarter.

Bharti Airtel is India’s one of leading telecom services provider having a large geographical presence. It has a strong presence in Africa. Airtel has a strong diversified service portfolio including digital platforms, DTH fiber to home.

An average of 30 analysts polled by MintGenie have a strong 'buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.