Bharti Airtel leads Nifty 50 gainers, jumps 6% on ICICI Securities upgrade to 'Buy'

Bharti Airtel Ltd

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26 Aug, 2025 12:21

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Shares of Bharti Airtel rose nearly 6 percent, emerging as the top gainer on the Nifty 50 on November 29, after ICICI Securities upgraded the stock to 'Buy' from 'Add,' citing strong fundamentals supporting its valuation. The brokerage assigned a target price of Rs 1,875, indicating an upside of 20 percent from its previous closing price of Rs 1,560.

At 2 PM, Bharti Airtel shares were trading over 5 percent higher at Rs 1,645. The stock has gained 62 percent year-to-date, significantly outperforming the Nifty 50, which has risen 10 percent during the same period. The stock delivered positive monthly returns consecutively from March to September before declining 6 percent in October. So far in November, it has gained 2 percent.

Bharti Airtel's current valuation recovery marks a stark contrast to its earlier derating phase between FY11 and FY20, when its average EV/EBITDA dropped to 7.5x. Challenges such as the entry of Reliance Jio, expensive spectrum renewals, and its costly Zain Africa acquisition pressured the stock during that period.

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However, the landscape has shifted. As per ICICI Securities, five key parameters—EBITDA growth, gross block increase, net debt, Return on Capital Employed (ROCE), and market share trends—help explain valuations for telcos in general, and Bharti Airtel in particular. "Our estimates for Bharti over FY25-28E suggest each of these five parameters could show further improvement, helping Bharti sustain valuations in base case or could enable further rerating," the brokerage said.

ICICI Securities said that while Bharti Airtel's valuation is at a premium to its Asia-Pacific (APAC) peers (excluding China), it's still attractive. ICICI Securities also highlighted the importance of Free Cash Flow (FCF) yield as a valuation metric.

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"Bharti's FCF yield for FY26E stands at strong 6.7 percent compared to APAC peers (excluding China) that are trading at 6 percent," ICICI Securities said. The brokerage believes that Bharti Airtel's FCF growth is sustainable over the next few years, making its valuation reasonable.

ICICI Securities also flagged potential downside risks, including market share loss in the India mobile business and a rise in competitive and regulatory intensities.

In Q2FY25, Bharti Airtel posted a consolidated net profit of Rs 3,593 crore, marking a 168 percent surge compared to Rs 1,341 crore in the same period last year. Revenue from operations rose 12 percent year-on-year to Rs 41,473 crore, up from Rs 37,044 crore in the corresponding quarter.

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