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Buy Bharti Airtel, target of Rs 1056: Indiabulls Securities
Indiabulls Securities Research has maintained its buy rating on Bharti Airtel with a target of Rs 1056. In the current scenario, as the Indian telecom market attracts huge funds of several global telecom giants, Bharti’s higher profitability and strong liquidity position serves as a twin-edged weapon to combat the growing competition.
Indiabulls Securities Research has maintained its buy rating on Bharti Airtel with a target of Rs 1056 in its December 17, 2008 research report. "In the current scenario, as the Indian telecom market attracts huge funds of several global telecom giants, Bharti's higher profitability and strong liquidity position serves as a twin-edged weapon to combat the growing competition. We expect Bharti's sales to grow at a CAGR of 33.4% for FY08-FY10. Due to lack of visibility, we have not factored the upsides from the Sri Lanka rollout, the DTH business, and the 3G services."
"However, we have further sliced off our EBITDA margin estimate for FY10 by 50 bps to 40% as an increase in network costs (due to rural penetration) and additional advertising spends (to combat increasing competition) seem inevitable. Our DCF-based valuation gives a target price of Rs 1,056, which provides a 48% upside from the current levels. Hence, we maintain our Buy rating," says Indiabulls Securities' research report.
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