New York-headquartered brokerage Jefferies has raised its target price on Indian telecom major Bharti Airtel. The firm’s rationale: the telco would benefit from rounds of tariff hikes in the next few years in the coming few years. Accordingly, the global brokerage has emphasised its buy signal and hiked target price from Rs 1,760 to Rs 1,970 a share, which works out to be about 12%.
However, the optimism of the global major failed to enthuse investors on September 13. Around 2 pm the price of a Bharti Airtel share dipped by Rs 13.35 (or 0.81%) to reach Rs 1,633.40.
Revenue, EDITDA to rise
According to Jefferies, the total revenue and EBITDA (earning before interest, tax, depreciation and amortisation) of the company’s operations in the Indian market can jump by 5% to 9% in the next two financial years ie, FY26 and FY27. Jeffires also thinks that EBITDA can rise by a compounded annual growth rate of as much as 19% between the years FY24 and FY27.
Earlier in September, another global major Goldman Sachs raised its target price of Bharti Airtel from Rs 900 to Rs 1,700 – a whopping 89%. Needless to mention, Goldman Sachs also maintained Buy signal on the stock that would ride robust growth and cash flow.
Not the only company
However, it needs to be mentioned that Bharti Airtel is not the only company that it going to undertake such a move. The other two telecom players, Reliance Jio and Vodafone Idea, would also adopt more than one round of tariff hikes in the next few years, though both might do so for quite different reasons. Vodafone Idea which is groaning under financial losses and a huge debt, desperately needs to raise revenue to keep its head above water. Reliance Jio, on the other hand, is on a growth curve and will need tariff hikes to continue the expansion and onward journey.
Jefferies is assuming that Airtel will benefit from a 10% hike in tariff in the middle of the next financial year ie, FY26. It would go for another similar hike in FY27. A projected lower capex in the next few years would also help Bharti Airtel is projected to achieve a 23% compounded growth in free cash flow to equity.
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Jefferies has assumed two round of tariff hikes by the telecom major in FY26 and FY27 which will not only raise its revenue but also its operating profits.. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
