Here's why Bharti stocks may withstand demonetisation storm

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26 Aug, 2025 12:21

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Reliance Jio’s extension of its free offer to customers till March 2017 coupled with demonetisation is set to hit telecom companies’ finances going forward, says JM Financial. The brokerage expects Bharti Airtel’s EBITDA to see a decline of 8-9 percent in third quarter of FY17. It has also reduced its target price on the stock to Rs 370 from Rs 400 per share. However, the double-whammy impact may be lesser due to lower operating leverage, rural exposure, growth in non-mobile earnings before interest, tax, depreciation and amortization (EBITDA) as well as gradual recovery in African region’s EBITDA, the brokerage said.The downside risks to the stock could be Jio’s proposed VoLTE-featured phone which could hit voice revenues as well as telecom regulator’s action to reduce call termination rate. Meanwhile, its tower infrastructure company, Bharti Infratel has been upgraded to hold from sell with an upside in its target price to Rs 380 from Rs 365. The rationale behind the move is based on near term buoyancy in tenancy additions along with reasonable valuations. “We expect tenancy adds to be resilient over the next 1-2 quarters,” JM Financial said. The brokerage, however, has raised concerns over Idea Cellular, forecasting EBITDA fall of 26 percent quarter on quarter (QoQ). It has cited increase in debt to alarming levels due to recent spectrum auctions spend and expects net debt to cross Rs 550 billion by March 2017. It has reduced the target price on Idea to Rs 70 from Rs 80 due to decreased revenues and EBITDA forecasts. “This necessitates balance sheet deleveraging on an urgent basis for Idea to retain capex flexibility in view of unlimited calling plans with large data buckets, being offered by Bharti/Jio,” JM Financial said. Reliance Jio is a part of Reliance Industries that owns Network 18 Media & moneycontrol.com