According to 5Paisa telecom companies will see an increased inflow of money due to tariff hikes but to different extents. Bharti Airtel and Vodafone Idea will see full benefits, whereas JIO will see partial gains since most of its subscribers are on higher duration packs.
A few other factors that will affect the Q4 numbers will be:
- SIM consolidation
- Lower pace of up-gradation to 4G due to higher smartphone prices.
- Two days lesser as compared to Q3 and
- 3% QoQ decline in diesel costs.
The brokerage estimates a 7% growth for JIO, 11% for Bharti Airtel, and 17% for Vodafone Idea. They estimate that Indus towers may see a flat QoQ Ebitda growth and Tata Communications is likely to see 1.7% growth.
Here are 5 telecom sector stock recommendations by 5Paisa. These targets are for a period of one year.
Bharti Airtel Limited
5Paisa estimates that Bharti Airtel might have added 2.5 million 4G subscribers in Q4 as compared to 3 million in Q3. Further, they estimate that Airtel’s India Ebitda to grow 15% QoQ and Airtel Africa’s Ebitda to remain flat. Recently, Airtel prepaid ₹8815 crores worth of deferred liabilities pertaining to the spectrum acquired in 2015.
- CMP: ₹ 759.05
- Target Price: 844
- Upside: 11.19%
- Recommendation: Buy
Vodafone Idea Limited
The analysts estimate a 7% QoQ revenue growth for Vi, considering the impact of SIM consolidation. The Ebitda growth is likely to be healthy at 17% due to its operating leverage. Recently, the company tied up with Apna, Enguru and Pariksha to provide curated job research and education services.
- CMP: ₹ 10.8
- Target Price: 10
- Downside: 7.41%
- Recommendation: Reduce
Indus Towers Limited
They expect a steady rise in tower count and tenancies. They expect rental revenue to remain flat QoQ in Q4. Recently, Airtel acquired a 4.7% stake in Indus Towers from the Vodafone Group.
- CMP: ₹ 220.95
- Target Price: ₹ 225
- Upside:1.83%
- Recommendation: Add
Tata Communications Limited
They expect the revenue to grow 2.4% QoQ, a marginal deduction as compared to Q3 since there are 2 fewer days in Q4. They expect a healthy YoY PAT growth of 27%. Recently, the company announced a multi-year collaboration as the official broadcast connectivity provider for Formula 1.
- CMP: ₹ 1360
- Target Price: ₹ 1600
- Upside: 17.65%
- Recommendation: Add
Tanla Platforms Limited
They expect Tanla to register a 33% revenue growth driven by healthy A2P SMS volumes, new client additions, better account mining as well as some tailwind from the ILD SMS termination rate increase. The stock has given multibagger returns of 30500% in the last eight years.
- CMP: ₹ 1576.10
- Target Price: ₹ 2123
- Upside: 34.70
- Recommendation: Buy
Disclaimer
The views and investment tips expressed by 5Paisa on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
