Bharti Airtel is currently seeing a mix of aggressive capital expansion and strategic promoter movements.
Following a high-profile investor call hosted by the company’s top management to address concerns over cash usage and future growth, major brokerage firms have released detailed assessments.
While the stock has faced some recent pressure due to fears of capital misallocation and a potential delay in tariff hikes, analysts from Motilal Oswal, Nomura, and JM Financial suggest that the underlying business remains on a firm footing.
Motilal Oswal on Bharti Airtel: ‘Buy’
Motilal Oswal maintains a positive outlook on the company, citing a target price of Rs 2,355. This indicates a potential upside of approximately 25% from the current market price.
Their analysis suggests that the company is well-positioned to benefit from a superior flow of cash and a strengthening balance sheet.
The firm projects that the company will record a Net Sales of Rs 2.418 lakh crore in the financial year 2027, with an EBITDA margin expected to climb to 54.9%.
According to the findings of Motilal Oswal, the India wireless business remains the primary value driver, contributing significantly to the overall valuation.
“The company’s focus on premiumisation and its industry-leading execution have consistently resulted in superior growth compared to peers,” according to the analysis by Motilal Oswal.
Nomura on Bharti Airtel: ‘Buy’
The firm has set a target price of Rs 2,300 for the telecom major, representing an upside of roughly 19%. Their report focuses on the takeaways from the recent investor call, specifically clarifying the timeline for the Rs 0.2 lakh crore investment into the newly licensed Non-Banking Financial Company, Airtel Money.
Nomura notes that this investment will not be a lump sum hit to the books but will be spread out over several years, with only 10% to 15% being deployed in the first year.
The brokerage also points out that the company plans to adopt a progressive dividend policy as its free cash flow generation speeds up in the coming years.
“Management highlighted that the committed Airtel Money investment of INR 200bn will be done gradually over the years with 10-15% to be invested in the first year,” according to the report by Nomura.
JM Financial on Bharti Airtel: ‘Buy’
The brokerage firm has issued a target price of Rs 2,455, implying an upside of 18%.
Their analysis deep dives into investor worries regarding the “overhang” of promoter stake sales and the timing of the next mobile tariff hike.
JM Financial believes the recent share price correction is an overreaction, noting that the company’s entry into the credit business is a natural extension of its massive base of over 370 million customers.
They also expect the company to generate a massive consolidated free cash flow of Rs 0.6 lakh crore to Rs 0.7 lakh crore annually, which should comfortably fund its expansion plans and debt repayments.
“Though capital mis-allocation concerns on the back of the recent foray into the NBFC business are fair, we believe the share price correction is overdone,” according to the analysis by JM Financial.
Consolidation moves: From Indus Towers to the Singtel exit
Apart from the financial metrics, the reports detail significant changes in the company’s corporate structure. Nomura reports that Bharti Airtel is likely to continue increasing its stake in Indus Towers, moving up from its current 51% holding.
Additionally, the company is set to consolidate its position in Airtel Africa by purchasing a 16% stake from the promoter family.
On the other hand, Singtel is expected to continue selling its 7% treasury shares in a gradual manner over the next few years, which analysts believe the market can absorb without major disruption.
“Bharti Airtel will consolidate its stake in Airtel Africa (~63% currently) by purchasing ~16% stake from the promoter family,” according to the findings by Nomura.
While there is a worry that the next round of tariff hikes might be pushed to the year 2027, the consensus among these three brokerage firms is that the company’s diversified revenue streams ranging from home broadband to enterprise services and now financial services provide a strong cushion for long-term growth.