Buy Bharti Airtel at every decline

With spectrum auction out and the M&A rules defined, the telecom sector is finally getting out of the regulatory interference which is a big positive for all the telecom players in India. Though the debt level of the sector will further rise, consolidation and tariff rationalization will make the leverage position of the sector comfortable in next 1-2 years. Both the big telecom players Bharti and Idea Cellular appears attractive for investment at current levels but Bharti Airtel in particular is very attractively poised at current price of around Rs. 290. Here is why?

1. Back of the envelope calculation suggest limited downside and reasonable upside. Lets consider following valuation points assuming around Rs.92000 crores of revenue, Rs.30000 crores of EBIDTA and net debt of Rs.60000 crores for FY-15.

Morgan Stanley, Nomura view on Bharti Airtel

Sanity seems to be returning back in the telecom sector after very long time. The consecutive failures of expensive airwaves auction, winding down of operation of Uninor and Siestama Shyam in select circles and gradual increase of call tariffs have made some of the stronger players like Bharti Airtel and Idea Cellular come back into the radar of investors and brokerage houses. 

Morgan Stanley has raised its rating on Bharti Airtel Ltd to "overweight" from "equalweight," while Nomura also raised its rating on Bharti, but to "neutral" from "reduce", citing a recent share price drop. 

Bharti Airtel being the largest telecom company in India with almost one third revenue market share, is expected to recover first and most with environment becoming more conducive for the operators.

Contrarian Stocks for 2013

With NSE Nifty up 26% in 2012, people who largely took a bullish call in 2011 on Indian equities made handsome gains. However like every rally not all stocks participated and there were clear winners and losers as far as individual stock performance were concerned. 

But all is not that bad for the stock that didn't do well last year as some of them has become  candidates in the category of contra bets. Value investors always believe in contrarian investing as only that style gives them the opportunity to buy stocks cheap. Value Investors believe that by chasing euphoric stocks you run a very high risk of quick erosion in stock prices in short span of time due to profit booking or bubble burst. 

ICICI Direct Research Report on Bharti Airtel: Recommend Strong Buy

ICICI Securities has become very bullish on India's largest telecom company Bharti Airtel and has recommended a strong buy on the stock with a target price of 420 which is good 37% appreciation from the current market price of 306 as on 13th July 2012. 

The brokerage report says "Using the DCF methodology for valuing Bharti and assuming a revenue CAGR of 7.9% in FY12-20E and a terminal  growth  of  3.0%  thereon,  we have arrived at a target price of  Rs 420. The risk reward seems to be favourable at this point. We rate the stock as STRONG BUY"

Bharti Airtel Q4 2012 - 2013 Result Analysis

Bharti Airtel Ltd today reported a consolidated net profit of 10.06 bln rupees for the quarter ended March 2012, missing the Street's expectation of 12.46 bln rupees. The company's consolidated revenue for the quarter was 187.29 bln rupees.

Following are the highlights of the reporting quarter's earnings and comments of the company's management team: 

Barclays overweight on Bharti Airtel

Barclays has retained its "overweight" recommendation on Bharti Airtel, after the company announced its fourth quarter result, with a target price of 440 rupees.

The brokerage believes that improving subscriber additions could turn revenue growth dynamics in the company's favour. Also, the cancellation of some operators' second-generation licences will help competitive dynamics and allow Bharti Airtel the flexibility to balance pricing and volume. 

Bharti Airtel subscribers base crosses 180 million

Bharti Airtel added 2.5 million new subscribers to its user base in the month of March 2012, highest in the last 12 months, due to increased number of MNPs going in favour of the India's largest telecom company, following the Supreme Court order for cancellation of 122 licences issued during A.Raja tenure.

As of March 2012, Bharti Airtel remains at No.1 position with a total subscriber base of 181.3 million while Idea maintains it's third position with 112.7 million subscribers. Vodafone remains second with total subscriber count at 150.5 million at the end of March.

Bharti Airtel Research Report - 2012

Bharti Airtel, being the largest telecom company in India, is being tracked by almost all major broking and research houses in India. 

Following are some of the latest research reports covering the prospects of Bharti Airtel in immediate future.

Bharti Airtel Research Report by Motilal Oswal , Angel Broking,  Prabhudas Liladhar

Bharti Airtel Q3 FY 2011 - 2012 Result Analysis

Bharti Airtel, India's largest telecom service provider, grew its revenues by 7% to Rs 18,477 crore in Q3 of current fiscal over the September 2011 (Q2) quarter. Its earnings before interest, tax, depreciation and amortization grew 2.5% sequentially while net profit declined by 16.6% y-o-y and 1.5% q-o-q to Rs 1,011.3 crore. Bharti’s third quarter performance shows that while it has managed to grow revenues, maintaining profitability is increasingly becoming a challenge.

Bharti reported a higher than expected SG&A of Rs 3,465 crore compared to estimates of Rs 3,116.7 crore. The impact of this higher SG&A spend has hurt the bottom line by Rs 235 crore. The company’s EBITDA margins too have contracted sequentially from 33.6% in Q2 to 32.2% in Q3.

Bharti’s ARPM rose to Rs 0.446 compared with Rs 0.436 a quarter earlier. Consequently, the company’s ARPU (average revenue per user) improved by Rs 4 sequentially to Rs 187 during the quarter.

Trading Strategy of the Month: Sell Bharti Airtel 440 Call of December Expiry

For InvestorZclub readers, this month's trading idea is a little bit conservative due to the fact that the markets across the globe are very volatile and uncertain. We have had significant correction in Indian markets in very short span of time and trading on Nifty seems to be a bit challenging at the start of this December series. Hence InvestorZclub is recommending a strategy on individual stock rather than NIFTY which seems to be quite certain and safe.

Traders can consider selling 440 Call of Bharti Airtel december 2011 series at the current market premium of Rs. 1.00.

The logic behind this strategy is: 

Bharti Infratel and Indus Tower IPO in fiscal 2013

Bharti Airtel is unlikely to come out with an IPO offer for its tower unit in the current financial year that ends in March said Akhil Gupta, deputy group CEO.

Bharti Infratel, the mobile phone carrier's telecom tower arm, was looking at a minimum $500 million IPO, for which it was expected to file regulatory papers in September, but could not due to uncertain market conditions and some objections raised by Vodafone and Idea regarding the listing of Indus Tower before Bharti Infratel.

Bharti Airtel Technical Analysis

Telecom tarriff war ended - Bharti hikes call rates, Telecom stocks hit 52 week high

Bharti Airtel , India's top mobile carrier, has raised call prices by up to 20 percent for prepaid users in some of its Indian telecoms zones, signalling a possible end of the telecom tarrif war.

Telecom stocks at 52 week high

Telecom stocks are back to life after being dead for almost 2 years. Amid all the 2G controversies and fear of intense competition, bigger players have emerged stronger and this is getting reflected in the prices of the stocks of bigger listed telecom players like Bharti and Idea. RCom being directly accused in 2G scam it has not been able to perform in line with the sector.

Idea cellular today touched Rs. 82.55 (52 week high) in intraday before closing at Rs. 81.35. Bharti Airtel touched an intraday high of Rs. 409.45 (52 week high) before closing at Rs. 398.10.

Bharti Airtel targets $5 billion revenue from Africa by March 2013

Bharti Airtel, which last year bought mobile phone operations in 15 African countries, is on target to generate $5 billion (Rs 22,000 crore) in revenue from the continent and reach 100 million subscribers there by the end of March 2013 said Manoj Kholi, the CEO of International operations.

Bharti paid $9 billion (Rs 40,000 cr) for most of Kuwait-based Zain's African cellular operations, which generated about

Bharti Airtel added 3 Million 3G subscribers till date

3G sbscription in India has shown good growth since its launch. Around 9 million consumers have already taken a 3G mobile connection since the services were launched in the country four months ago.

Bharti Airtel cornered most with 3 million subscribers followed by Tata DoCoMo with 1.5 million users.

Idea Cellular, Vodafone and BSNL have over a million 3G customers each.

Reliance Communications did not give out its numbers but sources said that it also has close to a million 3G connections.

Telecom operators in India are targeting around 100 million 3G connections by 2015.

Buy Bharti Airtel with an immediate target of 400

Bharti airtel seems to have broken out of a tough resistance of 360 and has managed to stay above this level in last few trading sessions. On 14th April the counter witnessed high volume of close to 8 million shares with unusually high delivery percentage of 74% which suggests that strong hands were buying stock in the cash segment. Based on options data for Bharti Airtel, it was seen that 380 call has seen a cut of 12% in open interest while the call of 400 has registered an addition of 40% in open interest, which suggest that the bias has shifted towards

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.