Bharti Airtel, RIL Upgraded, Vodafone Idea Downgraded By HSBC - Here's Why

HSBC Global Investment Research has issued a mixed outlook for India's telecom space, reiterating a bullish stance on Reliance Industries Ltd. (RIL) and Bharti Airtel Ltd. while lowering the target price for Vodafone Idea Ltd.

In a latest note, HSBC has maintained a 'buy' rating on Bharti Airtel, with an unchanged target price of Rs 2,200. The brokerage firm has backed Jio as well, raising the price target for RIL from Rs 1,630 to Rs 1,750 while maintaining a 'buy' rating.

As the Indian telecom race heats up, HSBC sees a key growth runway for both Jio and Airtel, with the brokerage firm notably citing Airtel's sustained growth in average revenue per user (ARPU), expanding home broadband subscribers and improving free cash flow.

HSBC believes Airtel is in a position to gain from improving market share and expects the company's ARPU to rise at a compounded annual growth rate (CAGR) of 4.9% between fiscal years 2025 and 2028.

As far as Reliance Jio, which is poised for an IPO next year, HSBC has pointed out the company's longer-term growth levers, such as digital services and data centres.

HSBC added that Jio continues to benefit from industry-wide improvements in monetisation and a likely moderation in capex intensity over the next few years.

While HSBC has a bullish outlook on Airtel and Jio, the brokerage firm has raised many red flags about Vodafone Idea, as they maintained a 'reduce' rating while cutting the target price from Rs 5.9 to Rs 5.8.

HSBC flagged the debt-laden carrier's limited ability to generate cash and meet adjusted gross revenue (AGR) payments.

While a potential industry-wide tariff hike in 2026 may aid revenues, HSBC believes Vodafone Idea's woeful financial standing will make it difficult for the company to realise the benefits.

HSBC emphasised that Vodafone Idea's financial fragility overshadows any near-term tailwinds, while Airtel and Jio remain the clear beneficiaries of any structural growth in the sector.