Buy Bharti Airtel; target of Rs 1010: Motilal Oswal

Motilal Oswal's research report on Bharti Airtel

Consolidated EBITDA grew 6.4% QoQ, led by a healthy 6%/8% growth in the India Mobile/Africa business, resulting in a stable FCF of INR43.7b. Payment of 5G spectrum dues led to a substantial increase in net debt to INR2t, with the net debt-to-EBITDA ratio at 3x. BHARTI should continue to clock a strong EBITDA CAGR of 19% over FY22- 24E, led by: a) an improvement in the 4G mix, b) market share gains, and c) steady inroads into the non-Wireless business. In the near term, higher investments in 5G can dilute FCF going forward and may lead to elevated debt levels. We maintain our Buy rating.

Outlook

We value BHARTI on a FY24 basis, assigning an EV/EBITDA ratio of 12x/5x to the India Mobile/Africa business, arriving at a SoTP-based TP of INR1,010. We maintain our Buy rating. We expect a better valuation multiple, given the consistent 20% growth opportunity.

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Bharti Airtel - 02-11-2022 - moti