JM Financial is bullish on Bharti Airtel has recommended buy rating on the stock with a target price of Rs 475 in its research report dated January 18, 2018.
JM Financial's research report on Bharti Airtel
Bharti’s 3QFY18 consol. revenue was broadly in line, but EBITDA of INR 75.9bn was 3.5% ahead of our forecast, partly aided by write-backs and reversals in India non-mobile (extowers) businesses. Africa delivered yet-another strong quarter, with underlying CCY growth of c.4% qoq in revenues and 12% in EBITDA, which may justify further re-rating versus 6.0xEV/EBITDA in our SOTP currently. India mobile revenue was 2.5% below forecast, as ARPU collapsed by 15.2% qoq (to INR 123); excluding impact of IUC cut, the ARPU decline from down-trading was 6.5% qoq. We see dim-prospects of a sequential revenue recovery in 4Q, and thus anticipate a 3-4% cut in our FY18E consol. EBITDA (excl. Telenor consolidation).
We maintain Buy rating, but recommend adding Bharti stock below INR 475. Positive catalysts are: (1) sequential recovery in India mobile revenues; (2) Maxis exiting Aircel. Downside risk is Jio keeping tariffs low through much of FY19.
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