Bharti Airtel Ltd. said on Jan. 12 it has received regulatory approval to raise foreign direct investment limit to 100% in its downstream companies.
The company informed the exchanges it's initiating the process to revise its FDI limit, as notified to its depositories, with immediate effect.
The development, according to Edelweiss Alternative Research, can result in inflows of around $600-700 million for the company. Bharti Airtel had recently secured approval from the Department of Telecommunications to raise foreign investment limit to 100% in three of its subsidiaries—Bharti Hexacom, Bharti Telecsonic and Bharti Teleport.
“Airtel has its full approvals in place, but that also means the subsidiaries below need to have their own approvals and that while we see nothing extraordinarily to worry about but has a process attached to it including our DTH business, Airtel Payments Bank and other subsidiaries,” Harjeet Kohli, group director of strategy and business development at Bharti Airtel Ltd., had said in the company's conference call for the quarter ended September 2020.
This comes after the mobile operator received approval from the Reserve Bank of India and Foreign Investment Promotion Board to increase FDI up to 74% in its payment bank arm, Airtel Payments Bank.
The MSCI adjustment date (of Bharti Airtel's weight in the MSCI Emerging Market Index) is Feb. 28, 2021, Edelweiss Alternative Research said. NSDL, the brokerage said, should soon update its foreign investment limits as MSCI only looks at NSDL depository data while making adjustments, it said.
Brokerages like ICICI Securities, BNP Paribas, and CLSA are bullish on Bharti Airtel owing to its stable market share and subscriber additions. HSBC Global reiterated its ‘Buy' rating on the mobile operator, and increased its target price by 14% to Rs 650.
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