Bharti Airtel Share Price Jumps 4.1%; ICICI Securities Suggests BUY Call with 20% Upside Potential
ICICI Securities has upgraded Bharti Airtel to a BUY, raising its target price to Rs 1,875 from a CMP of Rs 1,560, offering a 20% upside. The recommendation stems from the company’s improving financial metrics, supported by a robust growth trajectory in key parameters such as EBITDA and free cash flow (FCF) yields. Bharti Airtel’s valuation at an EV/EBITDA of 11.3x FY26E might appear premium, but its forecasted EBITDA CAGR of 14.8% justifies the optimism compared to APAC peers.
Key Drivers Behind the Valuation Upgrade
Resilient EBITDA Growth: Bharti Airtel's EBITDA is projected to grow at 14.8% CAGR over FY25–27E, significantly outpacing the APAC median of 4.5%.
Free Cash Flow Yield Advantage: ICICI Securities highlights Bharti's strong FCF yield of 6.7% in FY26E, exceeding the 6% yield of APAC telcos, excluding China.
Improved ROCE: The return on capital employed (ROCE) is expected to climb from 13.2% in FY25E to 19.9% in FY27E, driven by efficient capital deployment and deleveraging efforts.
Solid Historical Performance and Strategic Moves
Recovery in Core Metrics: Bharti’s EV/EBITDA valuation has improved from an average of 7.5x during FY11–20 to 9.7x in FY21–25TD, reflecting a marked recovery in profitability and market positioning.
Stable AGR Market Share: The company's adjusted gross revenue (AGR) market share in India has been on an upward trend, from 30.8% in FY20 to 38.3% in Q1FY25.
Strategic Spectrum Investments: Bharti’s moderated capital expenditure in the telecom sector, including minimal spectrum acquisition, positions it for sustained FCF generation.
Comparative Valuation Against APAC Peers
While Bharti trades at a premium EV/EBITDA multiple compared to its APAC counterparts (11.3x vs. 7.1x for FY26E), its superior growth prospects validate the valuation. Peers like China Mobile and Telekom Malaysia showcase slower growth in EBITDA and FCF yields.
| Company | EBITDA CAGR (%) | EV/EBITDA (x) | FCF Yield (%) |
|---|---|---|---|
| Bharti Airtel | 14.8 | 11.3 | 6.7 |
| China Mobile | 2.9 | 3.5 | 9.4 |
| Telekom Malaysia | 3.1 | 5.7 | 7.5 |
| Advanced Info Service | 4.0 | 9.3 | 6.5 |
Projected Financials
The financial projections for Bharti Airtel underline a steady growth story:
| Metric | FY24A | FY25E | FY26E | FY27E |
|---|---|---|---|---|
| Net Revenue (Rs mn) | 14,99,824 | 16,67,466 | 18,93,490 | 20,94,819 |
| EBITDA (Rs mn) | 7,82,918 | 9,03,229 | 10,53,852 | 11,89,350 |
| EBITDA Margin (%) | 52.2 | 54.2 | 55.7 | 56.8 |
| Net Profit (Rs mn) | 1,31,311 | 2,59,631 | 3,20,794 | 4,22,492 |
Technical Outlook: Support, Resistance, and Candlestick Patterns
Candlestick Patterns: Recent daily charts for Bharti Airtel depict a bullish engulfing pattern near Rs 1,500 levels, indicating renewed buying interest.
Fibonacci Levels: Using the 52-week high of Rs 1,779 and low of Rs 960:
23.6%: Rs 1,225
38.2%: Rs 1,335
50.0%: Rs 1,370 (critical support)
61.8%: Rs 1,505 (near-term resistance)
Support and Resistance Levels:
Key Support: Rs 1,480
Immediate Resistance: Rs 1,600
Breakout Level: Rs 1,720 (near 52-week high)
Actionable Insights for Investors
Investment Strategy: With robust EBITDA growth and improving FCF yields, Bharti Airtel offers an attractive long-term opportunity. Short-term traders can focus on the Rs 1,480–1,600 range for potential trades.
Risks to Watch: Downside risks include market share erosion in India’s mobile business and increased regulatory challenges.
Bottomline: A Compelling Telecom Bet
Bharti Airtel stands out as a leading telecom player with significant growth potential. ICICI Securities’ BUY recommendation highlights its resilience, competitive edge, and attractive valuation metrics. As the company leverages its strong FCF position and stabilizes its AGR market share, it is poised for further rerating, making it a valuable addition to portfolios.
