Bharti Airtel hits 52-week high as BofA Securities raises target, expects tariff hike

Analysts at BofA Securities say they expect a 20 percent hike tariff in 2024 and expect Bharti Airtel to benefit

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Bharti Airtel hit a 52-week high of Rs 1,069 on January 10 morning after BofA Securities upgraded the stock to “neutral” and also raised the target price on expectations of a tariff hike.

The target price has been raised to Rs 1,145, implying an upside of 7 percent from the current levels. BofA Securities analysts said they expect a “meaningful tariff hike” in the next 12 months and expect Bharti Airtel to benefit.

“We estimate over 20 percent tariff hike in 2024. The capex cycle pick-up is expected as Bharti’s capex is based on improving handset penetration. We expect faster market share shift towards Bharti and Jio as 5G rollout scales up. However, the stock’s valuations are not cheap at 9.4x FY25 proportionate EV/EBITDA,” the brokerage firm said.

In the past month, the stock has surged 5 percent against a 2 percent rise in the benchmark Sensex.

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Analysts at Prabhudas Lilladher expect subscriber growth of 3.6 million and a 1.1 percent quarter on quarter increase in average revenue per user (ARPU) in the October-December period.

ALSO READ: Airtel gets penalty notice from DoT for alleged violation of subscriber verification norms

Accordingly, they expect Bharti Airtel’s Q3FY24 consolidated revenue and earnings before interest, tax, depreciation, and amortisation (EBITDA) to increase 2.3 percent and 2 percent QoQ, respectively.

“Airtel Africa business is expected to see revenue growth of 4 percent QoQ, and we have factored in a 4 percent QoQ growth rate for the enterprise business. Home services will see revenue growth of 8.1 percent QoQ with margin expansion of 20bps QoQ. For DTH we have factored a muted growth of 0.7 percent QoQ,” the brokerage firm said.

At 10.45 am, the stock was trading at Rs 1,060.75 on the National Stock Exchange, down 0.35 percent from the previous close.

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