Shares of billionaire Sunil Mittal-run Bharti Airtel gained on Tuesday morning, after global firm Bank of America Merrill Lynch (BofAML) upgraded the stock to buy while also increasing the target stock price.
Shares of billionaire Sunil Mittal-run Bharti Airtel gained on Tuesday morning, after global firm Bank of America Merrill Lynch (BofAML) upgraded the stock to buy while also increasing the target stock price. Bharti Airtel share price gained more than 4.2% to hit the day’s high at Rs 348.20 on BSE. According to the research firm, after the recent Africa IPO, Bharti Airtel’s balance sheet is likely to strengthen and the firm is in a good position to improve its momentum in the core cellular business. Further, Airtel is well-positioned to capitalize on any weakness at Vodafone Idea (VIL) as it focuses on integrating its networks post-merger and expect its market share to remain stable at 30-31 percent from FY20 to FY24.
Bharti Airtel shares have outperformed the Sensex so far, gaining 17% since January, as compared to around 70% plunge in Vodafone Idea. Meanwhile, Sensex has gained around 4.5% in calendar year 2019, while, BSE Telecom has tanked 5% in the same period. BofAML noted that there is favourable risk-reward with tariff hike adding the upside optionality. Despite intense competition from billionaire Mukesh Ambani-led Reliance Jio, BofAML does not expect Bharti Airtel to lose market share to Jio in the high margin enterprise business given the sticky nature of business.
Yesterday, shares of Vodafone Idea plunged nearly 30% to Rs 6.56 after the firm reported a consolidated net loss of Rs 4,873.90 crores for the first quarter of FY20. The Apr-Jun financial results are not comparable with the same quarter of last year as the merger of Vodafone Group and Idea Cellular was completed in 2018 as the merger of Vodafone and Idea was completed in August 2018, said the firm. “We expect Vodafone Idea’s network to take 8-9 months to stabilize and see room for both Bharti and Jio to gain market share. In our base case, we also do not factor any potential stake sale at its tower-co Bharti Infratel for the next 12 months at least,” BofAML noted in its report.