Bharti Airtel shares extend gains, hit 52-week high; should you buy or sell stock?

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Published: February 17, 2020 12:45:18 PM

Bharti Airtel is staring at dues worth Rs 35,586 crore, including licence fee and spectrum usage charges, to the government. Collectively, telecom operators have to pay Rs 1.47 lakh crore in AGR dues as per the Supreme Court order dated October 24, 2019

Bharti AirtelBharti has created a war chest through its recent fundraise, which should allow it to comfortably comply with the verdict. A duopoly market will likely benefit it

Bharti Airtel shares hit 52-week high to touch Rs 568.60 apiece on BSE after the company said that it has paid Rs 10,000 crore to the Department of Telecom (DoT) towards statutory dues. The company has, further, said that it will the rest of the amount after self-assessment exercise. After the Supreme Court on Friday dismissed the modification plea on AGR liability, brokerage company Motilal Oswal is bullish on this telecom stock with an upside of 15 per cent. “Bharti has created a war chest through its recent fundraise, which should allow it to comfortably comply with the verdict. A duopoly market will likely benefit it (along with RJio) with incremental EBITDA potential of Rs 100 billion in FY22 even after building in network cost increase with blue-sky EBITDA of Rs 550 billion. We thus remain positive on Bharti,” Motilal Oswal Institutional Equities said in a research note.

Around 12 noon, the shares of Bharti Airtel were trading at 564.55 apiece on BSE. Collectively, telecom operators have to pay Rs 1.47 lakh crore in AGR dues as per the Supreme Court order dated October 24, 2019. The deadline to pay the amount was January 23, but only Reliance Jio has paid the amount. Bharti Airtel is staring at dues worth Rs 35,586 crore, including licence fee and spectrum usage charges, to the government. “The…total amount of Rs 10,000 crore has been paid on behalf of Bharti Airtel, Bharti Hexacom, and Telenor. We are in the process of completing the self-assessment exercise expeditiously and will duly make the balance payment upon completion of the same, before the next date of hearing in the SC,” PTI cited Bharti Airtel as saying.

Earlier on Friday, Bharti Airtel shares had hit a 52-week high at Rs 567.40 apiece on BSE post SC order on AGR dues. “Given the adverse situation for VIL, we note that RJio and Bharti could gain disproportionately. Thus, irrespective of an adverse ruling, Bharti has the best-hedged position even assuming that it pays the AGR liability. Assuming subscriber share of 40:60 for RJio/Bharti, both telcos could see EBITDA addition of Rs 150b/Rs 100b with a 50% margin, implying a jump of 29%/22% on FY22E EBITDA to Rs 671b/Rs 547b,” Motilal Oswal Institutional Equities said.

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