Year-End Investment Ideas That Can Reap Good Returns

Bharti Airtel

According to the research report from Motilal Oswal, 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.

"Its strong competitive position was seen in its robust 10m quality subscriber adds, which led to cumulative ARPU improvement of 5%. All of this was achieved without the much anticipated tariff hike," the brokerage firm has stated.

According to it the main concerns are a delay in tariff hikes and high capex driving down FCF

"With a healthy EBITDA of INR465b/INR546b in FY21/FY22E, FCF should grow to more than INR150b in FY22E, thus allowing healthy 10-12% deleveraging annually. We estimate 22% EBITDA CAGR over FY20-22E. ARPU in 4QFY21 may fall by 15% due to the abolishment of the IUC charge. However, it may in turn be marginally EBITDA positive," Motilal Oswal has stated in its research report. The shares of Bharti Airtel last closed at Rs 522 on the NSE.

ABFRL

According to Motilal Oswal, the Flipkart tie-up shows ABFRL's intent to transform its online Apparel business. It plans to accelerate its digital transformation strategy by building a strong frontend consumer interface for omni-channel functionality and augmenting its backend to expand reach.

"ABFRL has consistently improved its earnings graph, with a revenue/EBITDA CAGR of 32%/55% over FY14-20. Management has shown remarkable efforts toward cost control at a time when earnings are muted," the brokerage firm has stated.

"Strong deleveraging and earnings recovery from 2HFY21 would provide a double advantage and would certainly help lower risk and improve growth. The objective change in the business model of ABFRL post the deal with Flipkart would be a key monitorable," Motilal Oswal Research report has noted. According to it, the key concerns are high leverage. The shares of ABRFL were last trading at Rs 159 on the NSE.

Tata Power

According to the Motilal Oswal Research report, Tata Power (TPWR)'s results reflect the recovery in its EPC businesses and better working of its Mundra-Coal JV hedge.

"Divestment-related measures (international shipping business, Cennergi, Arutmin, and Tata SED) and the infusion of INR26b from promoter has aided debt reduction. Debt reduction should lead to lower interest costs. As EPC businesses recover and we build in the expectation of some normalization in WC by FY22, we view the risk-reward as favorable. Concerns. The Mundra PPA is yet to be finalized. At current coal prices, the benefit of a compensatory tariff may not be substantial," the brokerage has stated.

"With normalization in its EPC business and some normalization in WC, we expect EPS to rise at a 7-8% CAGR over FY20-23E. We are positive due to 1) Possible benefit from the merger of CGPL and Tata Power Solar with itself, 2) favorable InvIT valuations, and 3) tariff hike approval at Mundra provide upsides," it has further noted.

Disclaimer

The article is purely informational and is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.