Buy This Telecom Sector Stock For A Target Price Of Rs 860: ICICI Direct

ICICI Direct in its recently published report on Bharti Airtel Ltd (Airtel) has suggested buying the stocks of the company.

The brokerage is bullish on the stock and estimated a target price of Rs 860 apiece for the stocks. Considering this, the stocks have the potential to gain 21% in 12 months if stocks are purchased at the Current Market Price.

Bharti Airtel Ltd is a large-cap telecom sector company having a Market Capitalization of Rs 403,396 crore.

Stock Outlook & Returns

Today, the stocks of the company opened at Rs 713.90 apiece, currently trading at Rs 711.75 apiece, 1.05% up from the previous close of Rs 704.35 apiece. The Current Market Price of the stock is Rs 133.24 above the 52 week low and Rs 70.05 below the 52 week high, respectively.

The 52-week low of the stock is Rs 578.51 recorded on 26th August 2021, and the 52-week high is Rs 781.80 recorded on 24th November 2021, respectively. Return on Equity (ROE) is 6.39%. TTM EPS is Rs 7.52. TTM PE Ratio is 94.81 at the time of writing. The P/B ratio is 3.62.

Stocks over the past 1 week have jumped 2.66% and in the past 1 month 2.37%, respectively. However, in the past 3 months, the share slid down 1.12%. In the past 1 year, it has given a positive return of 14.37%. In the past 3 years, it has given a positive return of 91.73%. In the past 5 years, the share has given has a positive return of 70.96%.

Q1FY23 Results

Airtel saw residual benefits of tariff hikes during the quarter.

• Consolidated top line came in at Rs 32,805 crore, up 4.1% QoQ, 22.2% YoY with India wireless revenues up 3.4% QoQ (up 27.4% YoY) at Rs 18220 crore, led by residual pass-through of tariff hike driving ARPU, which came in at Rs 183, up 2.8% QoQ.
• Overall margins were at 50.4%, down 53 bps QoQ mainly owing to lower Africa margins, which were at 48.8%, down 110 bps QoQ. India wireless margins were at 51.2% (up 55 bps QoQ). Overall India margin was up 13 bps QoQ at 51%. PAT came in lower at Rs 1606.9 crore, owing to higher derivatives/forex fluctuation loss of Rs 511.9 crore and lower profit from associates of Rs 162.8 crore (vs. Rs 600 crore expected).
• Reported net debt (excluding lease liability) was at ~Rs 1.195 lakh crore (down by ~Rs 4035 crore QoQ) given the strong free cash flows.

Key triggers for future price performance

According to brokerage firm, the key future price performance are:

• Any further tariff hike as its pass through would bolster margins.
• Relative market share gain from VIL, given its stressed balance sheet and long term potential driven by growth opportunity from 5G.

Buy for a target price of Rs 860 apiece

Airtel's share price has been up ~89% over the past five years. Favourable industry structure of three players (two being strong), government relief, tariff hike and fund raise puts Airtel in a sweet spot to maintain its relative strength among peers with a formidable digital ecosystem offering. "We maintain our BUY rating. We value Airtel at unchanged target price of Rs 860," the brokerage has said.

About - Bharti Airtel Limited

Bharti Airtel is India's second-largest telecom operator with a ~ Rs 32.7 crore wireless customers in India and ~13.2 crore subscribers across 14 African countries. It enjoys industry-leading ARPU in the wireless business. The company is a leading ICT services provider in India. The company serve over 1200 global enterprises, 2000 large and 1 million medium/small businesses across India. Airtel Business offers a diverse portfolio of products and services such as Data Connectivity, Voice & Messaging, Conferencing, Cloud, Data Center, Security, IoT, CPaaS (Airtel IQ), NaaS, Enterprise Mobility, Network Integration & Professional services to Enterprises, Government, Carriers, Small & Medium Businesses, OTTS, and Mobile Network Operators across the globe.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.