Bharti Airtel shares: Jefferies maintains ‘Buy’ with revised target price. Key triggers

While this may be an overhang in the medium term, Jefferies has maintained its Buy rating on Bharti Airtel shares with revised target price of ₹855 given its strong growth outlook. “Our Buy rating is based on strong growth outlook from tariff hikes with continued market share gains and favorable risk-reward with limited downside from current levels.”

“Singtel will sell 3.3% stake in Bharti Airtel to Bharti Telecom, which holds 36% in Bharti Airtel and in which Singtel owns 49.4%. As a result, Singtel’s effective stake will fall by 1.7%. While Mittal Family has steadily reduced its stake in Bharti Airtel over the past 10 years from 30% to 23.8%, their effective stake will increase to 25.5% and will bring them closer to equalizing stake will Singtel. We view this positively,” the note stated.

Even if dividend payouts are raised by Bharti Airtel, BTL may still not be able to repay the outstanding debt of ₹220 bn. While BTL may refinance the debt, it may have to sell its stake in Bharti Airtel to pare of this debt eventually, it highlighted. 

“BTL has done so in the past when it sold 2.75% stake in Bharti Airtel in May-20 to repay the debt it had taken for Bharti’s rights issue. The stock fell 6% on the same day and was under pressure over the next few months. At CMP, BTL will have to sell 5% stake in Bharti Airtel to repay its entire debt,” Jefferies added.

The global brokerage builds 19% CAGR in India mobile revenues and 27% CAGR in India mobile EBITDA over FY22-25E and models 15% revenue Cagr and 50 bps margin expansion over FY23-25E for Africa.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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