Despite volatility, telecom major Bharti Airtel has given consistent returns to its investors. The stock has risen over 21 percent in the last 1 year as against an 8 percent rise in benchmark Nifty. However, it has underperformed benchmarks in 2023 YTD, gaining 6 percent versus a 7 percent rise in Nifty.
According to a MintGenie poll of 27 analysts, 10 have a ‘strong buy’ call on the stock, 11 have ‘buy’, 3 have ‘hold’ and 3 have ‘sell’ recommendations.
Currently trading at ₹857, the stock is 5 percent away from its record high of ₹901.55, hit on July 27, 2023. Thas jumped 22 percent from its 52-week low of ₹702.80, hit on August 17, 2022.
Earlier this month, the company posted June quarter numbers, missing expectations. It reported a consolidated net profit of ₹1,612 crore for Q1FY24, almost flat as against ₹1,607 crore in the last-year period. Meanwhile, its revenue from operations during the quarter rose 14 percent YoY to ₹37,440 crore.
The company also reported a 19 percent rise in its consolidated EBITDA at ₹19,746 crore and its EBITDA margins further improved 271 basis points to 53.7 percent in Q1.
ARPU (average revenue per user) for the quarter under review stood at ₹200, hitting this mark after 10 years versus ₹183 in the same quarter of last year on the back of sustained focus on acquiring quality customers and improved realisations on account of premiumisation. It was ₹193 in the preceding March quarter.
MintGenie collated views of brokerage firms and technical analysts to understand whether the stock is a ‘buy’ at this juncture or not. Let's take a look:
Fundamental Views
Axis Securities: The brokerage has a ‘buy’ call on Bharti Airtel with a target price of ₹960, indicating an upside of 12 percent.
“From a long-term perspective, we believe that backed by the highest penetrations, Bharti Airtel would continue to gain market share with minimum Capex requirement. With a stronger digital portfolio backed by rising per-user data, we are positive about the future growth of Airtel. We maintain our BUY rating on the stock given the company's superior margins, stronger subscriber growth, and higher 4G conversions, ” it said.
Jefferies: The brokerage maintains a 'Buy' on the stock with a revised price target of ₹1,040 from ₹1,020 earlier, implying an upside of 21 percent.
“Bharti Airtel's Q1 beat estimates with postpaid subscriber additions and higher margins in India mobile. A higher growth in Africa and strong free cash flow (FCF) generation were other key highlights of the quarter. Improving subscriber mix and cost controls provides the comfort of double-digit Ebitda growth in FY24 even without a tariff hike,” it said.
Religare Broking: The brokerage has a ‘buy’ call on the stock with a target price of ₹1,010, indicating an upside of 18 percent.
“Bharti has industry-leading ARPUs of ₹200 with a high sticky customer base with a wireless market share of 32.4 percent. Going ahead, it will focus on implementing its 5G infrastructure across India while also targeting nearly 60k villages and postpaid additions which will prove to be the next growth leg for the company. Besides, its non-core segments Airtel Business, Home Services and Digital Services all have been delivering stable growth. Financially, we have estimated its Revenue/EBITDA/PAT to grow at 16.5 percent/18.7 percent/38.6 percent CAGR over FY23-25E and have maintained a Buy rating with a target price of ₹1,010,” said the brokerage.
Prabhudas Lilladher: The brokerage downgraded the stock to ‘accumulate’ from ‘buy’ but raised its target price to ₹935 ( ₹923 earlier), which implies an upside of 9 percent.
“We remain structurally positive on Indian telecom and BHARTI given its favorable competitive structure. Also, aggressive customer-focused growth plans will create a virtuous cycle of growth for Bharti, in our view. Given the recent run-up in stock price, we downgrade our rating to ‘Accumulate’ from Buy at SOTP-based PT of ₹935 ( ₹923 earlier) even as we marginally increase FY24/FY25 ARPU to ₹210/ ₹238,” said PL.
Technical Views
Ashwin Ramani, Derivatives Analyst, SAMCO Securities: Bharti Airtel traded in a range of ₹650-750 between September 2021 and 2022. It broke out of this range and traded between ₹750-850 from September 2022 to June 2023. Since then, the stock has broken out and hit a high of ₹900. The stock is moving in 100-rupee ranges over the last 2 years and now the next possible target could be ₹950 if it holds above ₹850. The level of ₹850 is likely to act as immediate support for the stock which is also the previous swing high. The Relative Strength Index (RSI) has made higher highs on the weekly chart, which suggests the possibility of the stock making a new high after a minor pullback.
Rohan Shah - Technical Analyst, Religare Broking: Bharti Airtel has been gradually inching higher for the last 5 months and currently trading around record highs. However, it has taken a breather off late and is currently hovering in the range of 30-35 points ( ₹865-900) from the past few sessions, after the breakout from Cup and Handle pattern ( ₹850 levels) on the daily chart. “We believe the bullish momentum would re-emerge once the price stabilizes above the 900 mark, which will open the way for 950 levels in the short term,” said Shah.
Aditya Gaggar, Progressive Shares: Bharti Airtel is in the rising channel with a higher top higher bottom formation. Recently, it has given a breakout from the Rounding Bottom pattern. Indicators (RSI, MACD, ADX) are also supportive. One can buy the stock at a CMP of ₹881 or decline up to ₹851 for the target of ₹970 with a stop loss of ₹820.
