We continue to like Bharti Airtel's superior execution on the premiumization agenda. With a moderation in capex intensity, Bharti is likely to generate significant FCF (~Rs 1.3 trillion over FY25-27E), which should lead to significant deleveraging and improvement in shareholder returns.
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Motilal Oswal Report
Driven by tariff repair in the India wireless segment, Bharti Airtel Ltd.'s free cash flow generation improved significantly over the past few years (9M FY25: Rs 292 billion). Bharti's main priority for cash deployment so far has been prepaying high-cost debt.
With a complete flow-through of tariff hikes and a moderation in capex intensity, Bharti Airtel is likely to generate significant FCF (~Rs 1.3 trillion over FY25-27E).
With high-cost debt largely repaid and leverage under control, we believe capital allocation remains the key monitorable and would likely be the biggest driver for Bharti Airtel's stock price performance over the medium term.
Our FY25-27 estimates are broadly unchanged as we build in FY24-27 CAGR of ~15%/19% in Bharti's consolidated revenue/Ebitda. We reiterate our Buy rating on Bharti Airtel with a revised target price of Rs 1,985 (earlier Rs 1,990).
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