Buy Bharti Airtel; target of Rs 2,110: Motilal Oswal

Motilal Oswal research report on Bharti Airtel

Bharti reported in-line 4QFY25 performance, with 1%/2% QoQ growth in India wireless revenue/EBITDA as the residual flow-through of tariff hikes was offset by two fewer days QoQ. Consol. capex spiked in 4Q, though FY25 India capex (excl. Indus) at INR300b was lower than that in FY24, with capex expected to moderate further in FY26. Consol. net debt inched up by INR 50b due to the redemption of USD1b perpetual bonds, while FCF generation (before spectrum prepayments) remained robust at INR97b in 4Q and INR 390b in FY25. We continue to like BHARTI’s superior execution on the premiumization agenda. Further, with a moderation in capex intensity, BHARTI is likely to generate significant FCF of INR 1t over FY26-27E.

Outlook

Bharti continues to outperform (up 18% in CYTD vs. +4% for Nifty 50) and valuations have re-rated (11.5x FY27E EV/EBITDA). We believe regular tariff repair (beyond FY27) is key to further re-rating. Our FY26-27 estimates are largely unchanged. We model a CAGR of 14%/17% in Bharti’s consol. revenue/EBITDA over FY25-28E, driven by 1) benefits of an anticipated tariff hike of 15% in India wireless from Dec’25, 2) acceleration in Home broadband net adds, and 3) double-digit growth in Africa. We reiterate BUY on Bharti with our SoTP-based revised TP of INR2,110. We value India wireless and homes business on DCF (implies 13x Jun’27 EV/EBITDA), DTH/Enterprise at 5x/10x Jun’27 EBITDA and BHARTI’s stake in Indus Towers and Airtel Africa at a 25% discount to our TP/CMP.