Accumulate Bharti Airtel, target of Rs 358: Angel Broking

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Angel Broking has come out with a research report on Bharti Airtel 's Q2FY10 earnings. The research firm has maintained an accumulate rating on the stock, with a target price of Rs 358, including Rs 56 being the value of its Towerco business, in its report dated November 6, 2009.

"Going ahead, we expect Bharti to record a CAGR of 8.8% and 2% in its topline and bottomline, respectively, over FY2009-11E. At the CMP, the stock is trading at 13.8x FY2011E EPS, at an EV/EBITDA of 7x FY2011E EBITDA and at an EV/subscriber of US $115 on our FY2011E subscriber base. However, considering: 1) The specific nature of the telecom sector, wherein new players are at a material cost disadvantage to incumbents who are enjoying huge economies of scale, 2) Established brands, comprehensive network coverage and widespread distribution also bring down customer acquisition costs for the incumbents, and 3) In the medium-term, we believe that the customer base that the new entrants acquire will have value in the hands of incumbents and consolidation appears the most likely scenario, which will be beneficial for Bharti, we maintain an Accumulate on the stock, with a target price of Rs 358, including Rs 56 being the value of its Towerco business", says Angel Broking.

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