Buy Airtel at target of Rs 475; see 15% volume growth: IIFL

India Infoline maintains a 'buy' rating on Bharti Airtel with a target price of Rs 475 post the June quarter results. Speaking to CNBC-TV18, Bhavesh Gandhi Research Analyst at IIFL says Bharti’s profits indicate robust growth in Indian businesses. "Given the valuations and the promising India business despite the new entrant possibly in later half of the year, we believe that data growth would remain strong" he says, adding, "Bharti has the most fortified or spectrum holdings to take on new entrants."The company's mobile traffic grew 83 percent year on year (Y-o-Y), he says. " The data business is not losing any of its volume traction visible over the past few quarters and we expect about 15 percent volume growth to continue," he adds.Meanwhile, he prefers Tata Communication over Idea Cellular on better data services.Below is the transcript of Bhavesh Gandhi's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: What was your response to Bharti Airtel's numbers specially the India mobile business which has been growing well?A: India business probably is continuing on its robust trend we have witnessed for the past several quarters. So for instance the overall India business margin incept about 40 percent, about 40 bps on a sequential basis itself. So that was very heartening and obviously a topline growth was slightly above our estimates while margins were pretty much in line at 35 percent though if you exclude the one offs, the profits numbers were below our estimates.Latha: What about the margins, I thought that was what surprised at least our poll. We were expecting 39 percent in terms of the India margins but they delivered 40.5 almost in India margins?A: India margins were definitely a point of surprise especially given the run up they have had over the past several quarters, the past four quarters or so. So we have seen a wireless margins especially which are key driver of the overall India business inching up on a continuous basis over the past several quarters. So yes, India margins were a surprise but then overall margins obviously factor include the African business as well wherein the EBITDA margins were tepid to say so. So overall I think margins were pretty much where we had expected them to be.Sonia: In terms of the mobile data traffic growth that was quite healthy this time at about 83 percent year-on-year (Y-o-Y), what are you forecasting for the quarters to come?A: I think about 17.5 or 18 percent thereabouts sequential growth data business clearly is not losing any of its volume traction that has been visible over the past few quarters or so and we expect about 15 percent volume growth to continue.Sonia: In the last two years Bharti has been able to capture the highest amount of incremental market share because of its robust growth in the data revenue segment. What is your sense of how much of an upside this stock could see hereon because it has already given returns of about 20 percent or so this year?A: Given the valuations and the promising India business despite the new entrant possibly in later half of the year, we believe that data growth would remain strong and Bharti has the most fortified or spectrum holdings to take on new entrants. So based on all that and about 7.5 times EV/EBITDA basis, we do continue with our buy rating on a stock, we have a target of Rs 475.Latha: Anything else in the telecom space you like?A: We do have a buy rating on Tata Communications being a very good play on the data services.Latha: Not Idea?A: At this point, Idea would rank third in the order of preference, we would rather prefer Bharti and Tata Communications at this point of time.