Motilal Oswal Gives Buy Rating To This Telecom Stock For 29% Return Potential

The stock of leading telecom player Bharti Airtel has a potential to grow 29%, says renowned brokerage firm Motilal Oswal. Significantly, Airtel's contribution against Google's USD300m investment will be part of its USD2.5b CAPEX spending, which is expected to be a key driver of the company stock.

Target Price

The Current Market Price (CMP) of Bharti Airtel is Rs. 716. Motilal Oswal has estimated a Target Price for the stock at Rs. 920. The company is expected to offer a 29% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 716
Target Price	Rs. 920
1 year return	29.00%

Company performance

Bharti Airtel's net sales are expected to grow to Rs. 1,167b, EBITDA is expected to grow to Rs. 577b, and adjusted PAT is expected to grow to Rs. 33b, in FY 22. The firm stated, "We see a potential re-rating upside in both the India and Africa businesses on the back of steady earnings growth in each region from a tariff hike, ARPU mix improvement, and market share gains. We see an additional EBITDA potential of Rs. 100b if VIL is unable to infuse large-scale capital and improve its ARPU/revenue to sustainable levels."

Comments by Motilal Oswal

Maintaining buy rating Motilal Oswal said, "In a strategic move, Google will invest up to USD1b in a partnership with Bharti Airtel as part of its Google for India Digitization Fund. The deal includes an investment of USD700m to acquire 71.2m shares at Rs. 734/share, implying a 1.3% stake in Bharti Airtel on a diluted basis. Additionally, it will invest up to USD300m toward commercial agreements over the next 5 years. Bharti Airtel now plans to explore scaling up the deployment of Google's network virtualization solutions to deliver a better network experience. So, this deal may be more than an enabling investment to build commercials for Google in India which may not require an investment of Rs. 52.2b."

About the company

Bharti Airtel is a leading global telecom company with operations in 18 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 3 mobile service providers globally in terms of subscribers. In India, the company's product offerings include 2G, 3G, and 4G wireless services, mobile commerce, fixed line services, high-speed home broadband, DTH, enterprise services including national & international long-distance services to carriers. Bharti Airtel had over 403 million customers across its operations at the end of March 2019.

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Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.