This large cap telecom stock delivered 34% gain in FY20, brokerages see up to 40% upside. Check target price

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Published: April 1, 2020 2:18:51 PM

Following the coronavirus outbreak, SC AGR ruling and 21-day nationwide lockdown, Bharti Airtel share price has fallen around 29 per cent from its 52-week high of Rs 568.60 touched in the second month of this year

Bharti Airtel, SensexDespite several ups and downs in the last fiscal, Bharti Airtel share price managed to deliver decent returns as compared to 24 per cent decline in S&P BSE Sensex.

Telecom major Bharti Airtel share price gained nearly 34 per cent, from Rs 390 apiece on last day of the FY19 to Rs 441 on March 31, 2020. Despite several ups and downs in the last fiscal, Bharti Airtel share price managed to deliver decent returns as compared to 24 per cent decline in S&P BSE Sensex. Taking stock of the coronavirus (COVID-19), currency and fluctuation in crude oil prices, research and brokerage firm Motilal Oswal believes it to be “best hedged to face regulatory woes”. Irrespective of the Supreme Court ruling on adjusted gross revenue (AGR) on Vodafone Idea’s fortunes, “Bharti Airtel remains in a win-win situation,” brokerage firm said in a research note.

Bharti Airtel better placed telecom company

Bharti Airtel is one of the top picks in large cap space of brokerage firm ICICI Direct. Following the coronavirus outbreak, SC AGR ruling and 21-day nationwide lockdown, Bharti Airtel share price has fallen around 29 per cent from its 52-week high of Rs 568.60 touched in the second month of this year. However, this large cap telecom stock is still over 30 per cent higher from its 52-week low of Rs 305.69 hit in April last year. “Bharti Airtel continues to report a relatively stronger retention of its revenue market share with stable KPI across, and also enjoys a comfortable leverage vis-à-vis peers post the fund raise,” ICICI Direct Research said in its latest research note. It further added that recent development such as full AGR dues demand will not be an issue as it has the requisite funds at disposal. “With a strong footing in challenging times, Airtel is one of the better placed telecom players,” it said.

Bharti Airtel to garner 60% subscriber share from Voda Idea

In the afternoon deals, Bharti Airtel share price was 3.8 per cent down to Rs 424.40 apiece on BSE in Wednesday’s trade. It hit a day’s low of Rs 421.85 and high of 443 apiece. “We expect Bharti to garner 60% subscriber share and 50% revenue share from VIL (Vodafone Idea),” Motilal Oswal said taking cognizance of the survival risk that Vodafone Idea has been facing.

“Our estimates do not capture the potential upside for Bharti from incremental ARPU growth or market share gains, but factor in the AGR liability impact of Rs 343 bn as against Department of Telecommunications’ figure of Rs 445 bn. In either case, there would be EBITDA growth opportunity. We maintain our buy rating with a target price of Rs 620, a 40 per cent upside,” Motilal Oswal said.

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