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Buy Bharti Airtel,tgt Rs 1150: Religare
Religare has maintained buy rating on Bharti Airtel with target price of Rs 1150. The stock is trading at 16.8x and 13.8x expected FY09 and FY10 earnings of Rs 47.4 and Rs 57.7 respectively
Religare has maintained buy rating on Bharti Airtel with target price of Rs 1150 in its July 28, 2008 report. "Bharti Airtel has released a good set of numbers in Q1FY09, ahead of our estimates. Strong subscriber additions in conjunction with higher mobile traffic from existing and new clients supported a revenue growth of 8.5% QoQ. A decrease in STD rates and roaming charges boosted mobile traffic volumes but caused margins in the segment to decline. In a further dampener to mobile margins, the licence fee concession period in six circles expired during the quarter, elevating licence costs. However, ARPU (average revenue per user) in the mobile segment bettered our estimate at Rs 350, a marginal decline of 2% QoQ against our expectation of a 5.2% decline. We have revised our ARPU assumption since the gestation period for rural customers is proving to be lower than anticipated, with traffic picking up at a rapid pace. We are increasing our revenue and earnings estimates for FY09 and FY10 based on strong subscriber additions and our revised ARPU assumptions. The stock is trading at 16.8x and 13.8x expected FY09 and FY10 earnings of Rs 47.4 and Rs 57.7 respectively. We maintain our Buy recommendation with a target price of Rs 1,150." according to Religare report
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