Pick Bharti Airtel for long term: Mahadevan

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Pick Bharti Airtel for long term: Mahadevan

Pick Bharti Airtel for long term, says Suresh Mahadevan, Head of Research, UBS Securities.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Betadpur neutral on telecom space Hold Bharti Airtel, says Sharmila Joshi Buy Bharti Airtel at Rs 270-280: Mitesh Thacker Hold Bharti Airtel; target of Rs 350: Sharekhan ALSO READ See previous views by Suresh Mahadevan See what other Experts & Brokerages are saying about Bharti Airtel See messages about Bharti Airtel Bharti Airtel BSE | NSE 30/05/12 Are Mutual Funds betting on Bharti Airtel?

Pick Bharti Airtel for long term, says Suresh Mahadevan , Head of Research, UBS Securities.

Mahadevan told CNBC-TV18, "We have unfortunately lost the opportunity to downgrade telecom because we kind of underestimated how bad competition could get. But the reality in India is that there is clearly a lot of competition and there is lot of price related competition. We have taken a view that you can look at it as a share of pie approach or rather given the competition could be disruptive, you can look at what happens after the disruption and we have chosen the later part."

He further added, "We think a strong company such as Bharti Airtel could actually become stronger in this process because the price war is quite disruptive that forces the company to focus even more on the cost side, which they are definitely doing. Secondly, our view is that over the next 18-24 months, when it's difficult to pinpoint the time frame, I think the industry will consolidate. And once the industry consolidates, our view is that the pricing power will come back at least to a little extent and at that time if the company has really focused on the cost side then you get a big not only an earnings upside but also a re-rating."

"Currently what is happening is everybody has cut down numbers. So earnings are trough and you also have PE which is trough below market and you will get expansion in both in the medium-term, so to that extent we are positive. But as a sector tactically some of the 3G related news flows could be little bit of a dampener and it would be a good opportunity for long-term investors to maybe pick up some of these stocks like Bharti Airtel."