Airtel Hits All-Time High After CLSA Raises Target Price
The telecom-giant is at the forefront of mobile growth in India because of its robust management and reduced risk of competition from Reliance Jio, according to CLSA.
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Shares of Bharti Airtel Ltd. jumped to the record high after CLSA hiked its target price as it expects the company's growth is set to shift gears riding the overall mobile growth in India. The telecom-giant is at the forefront of mobile growth in India because of its robust management and reduced risk of competition from Reliance Jio, according to the report.
The brokerage has a 'buy' call on the stock with a target price of Rs 1,540 apiece, implying an upside of 8.5% from Friday's closing price. The target price is revised upward from Rs 1,370.
Bharti Airtel's strong management will continue to steer its growth and generate good returns, CLSA said. The average revenue per user, or ARPU, of Bharti Airtel is at a 15% premium to sector leader Reliance Jio, reflecting the company's management strength.
The telecom giant's user base in India has risen to 56.2 crore across 16 countries, of which 40.6 crore are in India. The stock's return is most sensitive to its average revenue per user, CLSA said.
The brokerage has forecasted an ARPU of Rs 286 for fiscal 2027 compared to the chief executive officers' target of Rs 300, which leaves room for positive surprise, according to CLSA.
CLSA estimates the return on capital employed to jump 9% to 21% by fiscal 2027, which will rank it as one of the best users of capital among telecom companies globally.
Key Takeaways From CLSA's Note
The brokerage maintained a 'buy' with a target price of Rs 1,540 apiece, implying an upside of 8.5%.
Strong management execution and mobile growth in India are driving 56.2 crore subscribers across 16 countries, of which 40.6 crore are in India.
Since 2017, the market cap has expanded 3.3 times to $100 billion.
Bharti Airtel's three key drivers are its high-growth, scalable business, strong management, and global competitive edge.
The average revenue per user, which is 15% higher than sector leader Reliance Jio, best demonstrates the strength of the company's management.
The management will continue to play a key role in steering strong growth and generating superior returns.
Return on capital employed should jump 9 percentage points to 21% by FY27CL ranking it as one of the best users of capital among telcos globally.
Bharti Airtel returns are most sensitive to Arpu, and our Rs 286 forecast in FY27CL versus the CEO's Rs 300 target leaves potential for a positive surprise.
Reliance Jio's competition risk is behind it, and Bharti Airtel is at the forefront of mobile growth and new opportunities.
Bharti Airtel continues to offer visible growth, backed by mobile tariff hikes.
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Shares of Bharti Airtel rose 0.67% to Rs 1,434.75 apiece, the highest level since its listing. It was trading 0.63% higher at Rs 1,434.45 as of 10:28 a.m., compared to 0.30% advance in the NSE Nifty 50 index.
The stock gained 63.15% in 12 months and 38.92% on year to date basis. Total traded volume so far in the day stood at 0.20 times its 30-day average. The relative strength index was at 65.54.
Out of 37 analysts tracking the company, 23 maintain a 'buy' rating, seven recommend a 'hold,' and two suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 71.8%.
