India’s telecom sector is gaining momentum again as mobile data use rises and operators manage their spending more carefully, according to Jefferies. The brokerage says the environment is improving, giving companies room to strengthen their earnings. Jefferies noted that customer spending on mobile services is increasing and operators are adding paying users at a steady pace. The brokerage says these trends, combined with more disciplined investment, can support stable performance across the industry.
Here are the top picks from the sector:
Jefferies on Bharti Airtel: ‘Buy’
Jefferies has set a target of Rs 2,635 for Bharti Airtel, which points to a 25% upside. According to Jefferies, Airtel continues to add users steadily and earns more per customer as people switch to bigger data plans.
Jefferies says Airtel’s two main businesses, India and Africa, produce healthy cash flows. The brokerage adds that Airtel’s approach to network spending is measured, which helps the company avoid unnecessary pressure on its finances.
Jefferies believes Airtel can grow further as users move to plans with higher data allowances and as the industry moves toward tariff increases. The brokerage says Airtel’s balance sheet strength and loyal user base support its positive view.
Jefferies on Bharti Hexacom: ‘Buy’
Jefferies has set a target of Rs 2,280 for Bharti Hexacom, which works out to a 29% upside, the highest in its telecom list. According to Jefferies, Hexacom has a firm presence in Rajasthan and the Northeast, where both user additions and data use continue to rise.
Jefferies says Hexacom keeps its spending under control and runs its operations with discipline. The brokerage notes that the company benefits from a focused regional footprint, which helps it maintain good margins.
Jefferies expects Hexacom to continue growing at a steady pace as more customers use data-heavy services. The brokerage says this combination of disciplined spending and steady demand supports its target.
Jefferies on Indus Towers: ‘Buy’
Indus Towers has a target of Rs 425, giving the stock a possible 6% upside. According to Jefferies, Indus remains important for telecom companies because growing data use requires more tower sites across the country.
Jefferies acknowledges concerns regarding Vodafone Idea’s slower expansion but says tower demand across the industry supports Indus’ long-term position. The brokerage notes that Indus’ scale and long-term contracts help keep its income steady.
Jefferies believes Indus could gain further once operators increase their network expansion. The brokerage says this can bring more tenancies and stronger rentals for the tower company.
Jefferies pointed out that Jio continues to add customers and move them to larger data plans, which supports the telecom segment’s earnings. The brokerage states that Jio’s network strength and product ecosystem continue to draw more paying customers. This, coupled with broader group earnings from retail and energy, gives Reliance a multi-engine structure that can weather market swings better than most single-segment businesses.
