Bharti Airtel Ltd. share price target

The biggest disappointment for Bharti we have heard from investors is lack of FCF generation in the past, which has capped shareholder value creation. In this note, we highlight the reasons for Bharti’s lack of FCF generation, which includes competitive intensity, costs of building spectrum portfolio, leapfrogging in technology adoption, regulatory payouts and Africa acquisition.

We value the stock at Rs 960/share based on SOTP valuation. TP indicates an upside of 24% from the CMP.

Bharti Airtel’s (Bharti) Q3FY23 was a no-tariff-hike quarter, so the focus was only on market share. It continued to win market share in the mobile business wherein it grabbed higher 4G subs, and ARPU was boosted by: 1) good post-paid subs addition, 2) sub transition from 2G to 4G, and 3) data monetisation from contextual marketing. Company gained market share even in the FTTH business (RJio has been gaining more) while the enterprise business’s consistent strong performance is a positive surprise.

Recommendation: Given the company's strong recovery potential backed by strong deal wins and improved client engagement, we maintain our BUY recommendation on the stock