More steam left in Bharti Airtel, Idea: UBS Securities

Suresh Mahadevan, MD & Head of Indian Equities of UBS Securities feels there is more steam left in Bharti Airtel and Idea Cellular.

Mahadevan told CNBC-TV18, “Bharti had a few one-offs in terms of their net income which was a miss but operationally, they continue to do well. Even Idea's numbers were quite alright and were pretty much in line. You have to give them a couple of quarters to demonstrate a little bit of pricing power. Once they demonstrate that, there is bit of re-rating which is possible even from here. The stocks have done relatively better from their lows.”
“There is more steam left in these two counters because the last three-four years have been hyper competitive for this sector, so the cost side has become very lean. If today, they get some tailwind in terms of pricing power, there is huge operating leverage. One paise change is Rs 5,000 crore of EBITDA for Bharti,” Mahadevan added.
Mahadevan further said, “Both Bharti and Idea in our view stand to benefit because they are market leaders, they are taking more shares away from the others. Bharti is a stock which has been a massive underperformer. It has even underperformed Idea by 40 percent or so since the beginning of last year. Once they show pricing power, there is a big catch up that may happen in this name.”