Bharti slips 2% as UBS removes it from key call list

Moneycontrol Bureau

Shares of Bharti Airtel slipped 2 percent intraday on Wednesday as UBS removes it from its key call post the stock’s strong performance. The telecom stock has outperformed the Nifty by 20 percent since the start of the spectrum auction. UBS has a buy rating on Bharti with a price target of Rs 480 per share.

The brokerage expects voice revenue per minute (RPM) to decline by 1 percent quarter-on-quarter Q4FY15, due to a cut in interconnect charges (IUC) from March 1. However, the cut should also aid an improvement in EBITDA margins, as the interconnect cost will also come down, it adds.

“We value the India and South Africa operations at Rs 402, Airtel's 72 percent stake in Bharti Infratel at Rs 138 and the Africa operations at a –Rs 50 equity value. We also incorporate a one-off payment of Rs 9 per share, related to excess spectrum charges,” UBS says in a report.