ICICI Securities has upgraded its rating for Bharti Airtel to ‘Buy’, citing strong fundamentals and growth potential. The brokerage has set a target price of ₹1,875 for the stock, based on its latest research report dated November 29, 2024.
Bharti Airtel Stock Performance
- Current Price: ₹1,626.70 (as of November 29, 2024, 2:39 PM IST).
- Day’s Movement: The stock saw a gain of ₹66.30 (+4.25%) with intraday highs and lows of ₹1,648.90 and ₹1,551.15, respectively.
- Trading Volume: Over 8 million shares exchanged hands during the day, reflecting heightened investor interest.
ICICI Securities’ Valuation Analysis
ICICI Securities highlighted that Bharti Airtel’s Enterprise Value/EBITDA (EV/EBITDA) ratio, adjusted for Ind AS standards, stands at 11.3x for FY26E. While this is at a premium compared to the median 7.1x EV/EBITDA of its APAC (excluding China) peers, Bharti Airtel offers a significantly higher EBITDA compound annual growth rate (CAGR) of 14.8% over the next two years, compared to just 4.5% for its regional counterparts.
When compared on Free Cash Flow (FCF) yield, Bharti Airtel’s 6.7% for FY26E is competitive with the APAC median of 6%, making it an attractive investment for long-term growth.
Why ICICI Securities is Bullish on Bharti Airtel
ICICI Securities cited five key reasons for the bullish outlook on Bharti Airtel:
- Strong Revenue Growth: Supported by increasing market penetration and expanding user base.
- Improved Operating Metrics: Significant improvement in ARPU (Average Revenue Per User) and subscriber retention.
- Expansion in 5G Services: Bharti Airtel’s leadership in 5G rollout positions it for sustained growth.
- Cost Management: Improved efficiency in managing operational costs and capital expenditures.
- Robust Free Cash Flow: Continued focus on improving FCF yields provides long-term valuation support.
Outlook: Solid Fundamentals to Drive Growth
ICICI Securities upgraded Bharti Airtel from ‘Add’ to ‘Buy’, driven by its strong operational metrics and competitive positioning in the telecom sector. The brokerage believes that Bharti’s current valuation has more upside potential, supported by sustained revenue growth and improving margins.
Key Takeaway for Investors
Bharti Airtel’s robust fundamentals, competitive FCF yield, and market leadership make it a compelling choice for long-term investors. With a target price of ₹1,875, ICICI Securities expects significant upside, making Bharti Airtel a stock to watch in the coming months.
Disclaimer: The above analysis is based on the research report from ICICI Securities. Investors are advised to consult certified financial advisors before making any investment decisions.