Moneycontrol
Oct 13, 2017 05:17 PM IST | Source: Moneycontrol.com

Buy Bharti Airtel; target of Rs 470: Motilal Oswal

Motilal Oswal is bullish on Bharti Airtel has recommended buy rating on the stock with a target price of Rs 470 in its research report dated October 12, 2017.

Buy Bharti Airtel; target of Rs 470: Motilal Oswal

Motilal Oswal's research report on Bharti Airtel


Bharti Airtel (BHARTI) has announced the acquisition of Tata Teleservices' (TTSL) consumer telecom business at a potential EV of INR20b (as per media sources). The deal implies EV/sales of meager 0.2x. The move is expected to expand Bharti's gross revenue market share to ~39% and subscriber market share to 30%.  The acquisition will allow BHARTI to further strengthen its spectrum portfolio by adding 71.3mhz of liberalized spectrum (40%) in the 2,100mhz and 1,800mhz bands (also adds 2nd and 3rd carrier spectrum). We believe the company may not retain the rest of the administered spectrum (60%), which is valid for meager 2-3 years (expiry in 2021), restricting capex.


Outlook


Our workings indicate potential EBITDA of INR30b from the TTSL acquisition in 2-3 years, which is ~9% of BHARTI's consolidated EBITDA. At 7x EV/EBITDA, it offers potential upside of 12%. We remain positive on BHARTI, with a target price of INR470.


For all recommendations report, click here


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