Stay invested in Idea, Bharti Airtel: Motilal Oswal

Rajat Rajgharia, Motilal Oswal Securities told CNBC-TV18, "Telecom is one space which we had upgraded just about couple of quarters back because we had started believing that there are enough indications in the system which is making things difficult outside the top four-five players."

He further added, "We had fair bit of interactions with all the managements also post the reported numbers. This quarter, traffic growth was a positive surprise contrary to expectations of the street. One of the key reasons why it happened is because a lot of the traffic has started to slowly move from the newer set of players to the big set of players into the industry. This is one process which will continue over the next many quarters."
"More important to note is that the Revenue Per Minute (RPM) of each of the stronger player is almost 1.5-2 times RPM of the newer players which means that when a traffic moves from the new player to an old player, the revenue that it is driving is more than 2 times. Idea as a stock will do fairly well because we have seen good upgrades happening after this quarter. This process will continue over the coming quarters."
"We have seen whenever market sees stocks or sectors getting into an upgrade cycle, valuations at the beginning of the cycle should not matter much because you have to ride through the cycle well. This is the first quarter where Idea has seen a reasonably good upgrade and Bharti Airtel did not see any downgrades. I think this process will continue over the coming quarters. So stay invested. Idea being the pure player will benefit well and Bharti Airtel also will do fairly well in the space."