The shares of Bharti Airtel are in focus after Jefferies has assigned a buy rating with an upside potential of 22 percent from its previous closing price. In this article, we will discuss the rationale behind this uptick.
With a market capitalization of 11,61,195 crores, the shares of Bharti Airtel Ltd previously closed at Rs. 1937, close to its 52-week high of Rs 1,949. Over the past five years, the stock has delivered a return of 252 percent. Global brokerage house Jefferies has assigned a target price of Rs 2,370 per share, signalling an upside potential of 22.35 percent.
Bharti Airtel is Jefferies’ top pick in the telecom space, describing it as its preferred telecom play based on robust fundamentals and favourable industry dynamics.
According to Jefferies, Airtel should be a significant beneficiary of consumption growth in India because of its scale and limited competition. Jefferies is projecting revenue growth in the mid-teens, driven by increasing data consumption and digital adoption, attractive valuation, and an overall structural decline in capex intensity, providing the potential to increase free cash flows.
However, Jefferies stated some downward risks as well. It cited that the absence of fresh tariff hikes, slower-than-expected monetisation of 5G, higher capex requirements, and potential market share erosion in a rapidly evolving telecom landscape may lead to a miss in achieving this target.
Financial Highlights
The company reported a revenue growth of 15.34 percent to Rs 1,72,985 crores in FY25 from Rs 1,49,982 crores in FY24. Additionally, the company reported a net profit growth of 338 percent to Rs 37,481 crores in FY25 from Rs 8,558 crores in FY24.
The stock delivered an ROE and ROCE of 28.34 percent and 15.36 percent, respectively, and is currently trading at a P/E of 41.90x as compared to its industry peers of 41.89.
Bharti Airtel Limited is a multinational telecommunications service provider providing mobile, broadband, and digital television services in India, Africa, and South Asia.
The firm is involved in telecommunication businesses based on 2G, 3G, 4G, and 5G networks and offers its customers voice, data, and enterprise solutions. It also provides mobile broadband, fixed-line broadband and telecom tower services.
The Airtel business segment affords managed services, data centres and digital media services. Additional mobile services that are typically also offered are mobile TV, video streaming and support for gaming applications.
Written by Satyajeet Mukherjee
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