Motilal Oswal is bullish on Bharti Airtel has recommended buy rating on the stock with a target price of Rs 710 in its research report dated May 19, 2020.
Motilal Oswal 's research report on Bharti Airtel
The price hikes taken in Dec’19 and healthy 4G subscriber adds improved ARPU, which in turn led to an increase in EBITDA. However, capex doubled QoQ to INR113b, which resulted in operating FCF turning negative. Further, the QIP amount was utilized to partly pay AGR liabilities. - We largely maintain our FY21E consol. EBITDA estimates building ARPU increase of 8% on favorable 4G subscriber mix. We increase our FY22E EBITDA by 5% with higher ARPU increase of 14%, after building in some tariff increase.
We assign EV/EBITDA of 12x to the India wireless business and 6x to the Africa business on FY22E to arrive at a TP (SOTP) of INR710 (prior: INR620). Maintain Buy. Our higher multiple for the India wireless business captures expected gains from any potential ARPU increase, growing market share and possible government reliefs.
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