Bharti Airtel Gains As Brokerages Maintain 'Buy' Calls

On Friday, shares of Bharti Airtel gained as CLSA maintained its "buy" call on the stock with the target at Rs 715 apiece. Motilal Oswal also has a "buy" call on the stock with a target price of Rs 650.

The stock rose to an intraday high of Rs 508.50 apiece on Friday.

CLSA is of the view that the telecom major was not following in the footsteps of Vodafone Idea to hike postpaid tariff. Bharti Airtel's gain in subscribers and an increase in revenue market share has CLSA believing that with intensifying market-share battle, sector floor tariffs would be preferred. Even if the telecom company does not lead in hikes, it had the best flowthrough of December increases, it said.

Bharti Airtel's ARPU (Average Return Per User) is at a 12-24% premium to its peers, it added.

Meanwhile, Motilal Oswal remains bullish on Bharti Airtel given its strong earnings outlook (even without a price hike) and improving RoCE and FCF generation potential. The brokerage expects it to generate post-interest FCF of Rs 64 billion in FY22E after factoring in the spectrum renewal cost of Rs 130 billion.

Earlier this month, data released from the Telecom Regulatory Authority of India (TRAI) showed that Bharti Airtel was the biggest gainer in terms of users in September with 3.8 million subscriber additions. Reliance Jio added 1.5 million users and BSNL gained 78,252 users during the month. It is the first time in 4 years that a telecom operator beat Jio in monthly subscriber addition.