Analyst Sees 7% Upside For Bharti Airtel Even After Telco Joins $100B Club

Bharti Airtel shares were trading higher on Monday after CLSA adopted a bullish stance on the stock based on its strong growth in the telecom sector.

What Happened: The global brokerage issued a “buy” call on the telco with a target price of ₹1,540 per share, driven by the success of its telecom business, which helped it join the $100 billion (₹8.35 lakh crore) market cap club recently.

Bharti Airtel’s strong growth in the Indian mobile segment, supported by effective management execution, has propelled the company into the elite group of four Indian firms with market caps exceeding $100 billion, CLSA noted.

After a decade of stagnation, Bharti Airtel’s market capitalisation has expanded 3.3 times since 2017. CLSA attributes this growth to the company’s high-growth scalable business, strong management and competitive global edge.

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Second Opinion: Macquarie expects Bharti Airtel to post its highest-ever return on capital invested this fiscal and estimates Airtel’s return on capital employed to surge to 10-19% during FY25-28 from 2-6% in the last more than a decade, aided by tariff hikes, better subscriber mix and capex moderation.

Airtel had invested $32 billion (₹2.7 lakh crore) in FY24, generating a return of 8%. Over the next four years, while investments will drop to $28 billion (₹2.3 lah crore) per year, returns will likely more than double to 19%, Macquarie data showed.

From its lows in FY19, Airtel has said its India mobile average revenue per user (ARPU) has improved to ₹209 in the fourth quarter of FY24 (doubling in five years).

Macquarie expects Airtel’s India ARPU to reach ₹275 per month in FY27, driven by a likely 15% rise in industry tariffs post the general elections this week, followed by ongoing mix improvements: data users, upgrades to 5G, strategic segmentation and prepaid to postpaid conversions.

Price Action: Airtel’s share price was up 0.53% at ₹1,432.75 around noon on Monday.

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