Analysts are highly positive on Bharti Airtel, the flagship company of Bharti Enterprises. They see an upside of up to 40% from the current market price in the next one year. Axis Securities recommend to buy the stock with a target price of ₹676, Motilal Oswal has kept the target at ₹650, HDFC Securities has put a target price of 597, Dolat Research has kept the target at ₹605 per share. Analysts are impressed by the rise in Bharti Airtel’s ARPU (Average revenue per user) sequentially for the fourth straight quarter. 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).
“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%,” says Motilal Oswal in its Diwali Picks – Samvat 2077 report.
Bharti Airtel is amongst the world’s largest telecommunications companies offering mobile, fixed broadband, digital TV solutions and mobile commerce to over 400 million customers across 18 countries including India, South Asia and Africa. It is headquartered in New Delhi, India.
Analysts believe the increase in ARPU will impact EBITDA going forward.
“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,” says HDFC Securities.
Bharti Airtel is aiming to tap the $1billion cloud communications market with the launch of Airtel IQ for enterprises and small medium enterprises. The company has picked up a strategic stake in tech startup Waybeo as part of its strategy to scale up its cloud offerings. Bharti Airtel and Amazon Web Services, a cloud service provider, announced a multi-year, strategic collaboration agreement to offer cloud solutions to large and small enterprises.
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,” says HDFC Securities.