Bharti Airtel gains on 'buy' call from Jefferies, Sunil Mittal’s Rs 300 ARPU target

Jefferies has maintained a 'buy' call on Bharti Airtel with a target price of Rs 1,300.

Shares of Bharti Airtel gained 1 percent, opening at Rs 1,143.55 on the NSE on February 28, on the hope of a rise in average revenue per user (ARPU). The stock had closed 1.19 percent higher at Rs 1,123.30 in the last session.

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In an interview with Moneycontrol on February 27, Bharti Enterprises Chairman Sunil Bharti Mittal said that the ARPU of Bharti Airtel was the highest in the industry but needs to be at the Rs 300 level. "First pitstop was Rs 200. That’s taken five to six years. But it’s taken a long time, and the costs have gone up… inflation has been there. So, Rs 300 is probably relevant today or not. But at least let’s get there. We’ve already had a slight premium to the competition," he said.

Jefferies has maintained a 'buy' call on the stock with a target  price of Rs 1,300. Analysts say that translation of tariff hikes into ARPU has been better  "around 17 percent CAGR as against 12 percent in RoI".

According to the report, analysis of TRAI data also suggests that Bharti Hexacom is placed favourably as "its markets have historically grown 3-5 percent faster" than the rest of India.

Also read: MC Exclusive: Tariffs are going up, need to be at Rs 300 ARPU level, says Sunil Mittal

In January 2024, Bharti Airtel had announced that its board had approved the initial public offering of its subsidiary Bharti Hexacom where it holds 70 percent stake, while the rest 30 percent is with the government. The IPO will comprise of an offer-for-sale (OFS) of 10 crore equity shares, of a face value of Rs 5 each. "Bharti Hexacom may see higher market gains, given Bharti's superior execution and Vodafone India's weak positioning," the report said.