Buy Bharti Airtel, target of Rs 866: IIFL

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IIFL has maintained its buy rating on Bharti Airtel with a target of Rs 866 in its report dated July 3, 2009.

"In our view, the Bharti-MTN deal is driven more by strategic considerations than by synergies. In a world where giants such as Apple and Google are invading the telco space, size will be key. Nevertheless, an analysis of savings / synergy opportunities in the proposed Bharti-MTN deal suggests that Bharti can have a gain of almost USD 3 billion. Our key assumptions are based on measures attributable to Bharti's involvement, over and above MTN's own cost reduction measures. These include estimates of opex and capex savings in MTN  and capex savings in Bharti. We consider opex savings in Bharti attributable to this deal unlikely. The proposed deal (as the terms stand now) is not significantly earnings dilutive for Bharti even without considering synergies. Hence, we are in no hurry to reduce our TP (Rs 866); we retain 'BUY', " says IIFL's research report.

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