CLSA sees over 30% upside in Bharti Airtel; here’s why

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Global brokerage CLSA sees over 30% upside in Bharti Airtel, citing better score than peers in discipline, transparency, independence, environment and social areas. The telecom major scores 78.70 in CLSA ESG ratings, which is 13-17% higher than the country score and sector average.

It believes that Bharti Airtel can touch Rs 730 in the next 12 months. Shares of the company traded 0.48% higher at Rs 545.55 at around 2.30 pm (IST). “Bharti Airtel has been aggressively digitised operations, and it has been at the forefront during Covid-19,” CLSA said.

Alongside in core business, Bharti Airtel has been aggressively digitising operations with initiatives such as over 1 million retailers transacting daily on “Mitra app”. “Bharti Airtel’s improving ESG is underlined by longstanding SingTel partnership, diversified board, the leadership of Sunil Mittal and winning execution by Gopal Vittal.” the overseas firm said.

On the other hand, telecom player Vodafone Idea was traded almost flat at Rs 9.42 at around 2.40 pm (IST). Reliance Jio’s parent Reliance Industries was up 0.96% at Rs 1,985.75. Coming to the upcoming quarterly results, brokerage Motilal Oswal believes that the telecom universe should report loss for the 15th straight quarter, largely due to Vodafone Idea. On the other hand, it added that sectoral EBITDA margins are likely to expand 590 basis points YoY to 45.50%.

The quarter should see the interplay of three or four key factors. “On the ARPU (average revenue per user) front, the end of IUC charges as per the TRAI order should reduce ARPU, although the impact on EBITDA would be limited. This would be partly offset by the improvement in ARPU, led by a favourable mix of 4G subscribers for Bharti, VIL, and even RJio,” Motilal Oswal said.