Goldman Sachs puts BUY rating on Bharti Airtel

Goldman Sachs has upgraded Bharti Airtel to buy from neutral and raised its target price on the stock of India's top mobile phone operator to Rs. 430

We expect the price target is conservative. The recent 2G scams are more likely to hit newer and unlisted player in the telecom space like UNINOR, Videocon, LOOP etc. This will rationalize the competition and would be favourable for the listed telecom player like Bharti Airtel. The tariff war seems to have bottomed out and the uncertainity in terms of its african operation is alomost over. Bharti is confident of it African operation turnaround in next 1 year. Most of the indian mutual funds have increase their stake in Bharti in last 6 months.

If Bharti reaches its target of 100 Million users in Africa by FY-12 then we exepect Bharti to report a Consolidated revenue of approximately Rs. 75,000 crores and PAT of around Rs. 12,000 crores in FY-13. Considering a PE multiple of 18, which is the forward multiple at which SENSEX broadly is trading at, then the market capitalization of  Bharti is expected to be approx.  Rs. 2,16,000 crores and hence the target price for Bharti is expected to be at Rs 560 in next 1.5 year. A near 70% appreciation from current levels of 335.