Bharti Airtel share price extended gains on Tuesday, rising more than 7 percent to hit a record high of Rs 667.80 apiece after the company’s Chairman Sunil Bharti Mittal called for a tariff hike and a need to increase the company’s Average Revenue Per User (ARPU).
The board of the telecom operator had on August 29 approved fundraising via a rights issue of up to Rs 21,000 crore. The Board cleared the rights issue price of Rs 535 per fully paid-up equity share, including a premium of Rs 530 per equity share.
Bharti Airtel’s debt has soared 30 percent YoY with AGR and spectrum liabilities. Mittal believes the Rs 21,000 crore rights issue will allow it to leverage this once-in-a-lifetime opportunity. Bharti Airtel’s mobile revenue market share is at an all-time high, even FTTH, data centres, and enterprise businesses are seeing growth acceleration, he said during investors concall.
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“Sunil Bharti Mittal, the leader behind Bharti Airtel, sees an opportunity to accelerate growth. Given the revenue market share is at an all-time high, Mittal sees a need for Arpu to reach Rs 200 in 2022 versus our forecast of Rs 199 by FY24. He said 5G will be a reality in 2HFY23 at least in top cities and is hopeful of spectrum pricing being lowered,” global brokerage CLSA said.
CLSA sees upside potential to its Bharti Airtel forecasts and believes the stock valuation is compelling.
The brokerage firm reiterated a 'buy' call on the stock with a target price of Rs 780 per share.
Citi believes that the commitment of promoters to the rights issue is positive and should inspire confidence. The staggered nature of capital raise indicates the gradual deployment of funds and it allays concerns on non-core investments, Citi said.
A key to stock performance will hinge on strong FCF generation, which will be contingent on market share gains and tariff hikes, it added.
Citi has a 'buy' call on Bharti Airtel and a target price of Rs 760 per share.
At 3:05 pm, the shares of Bharti Airtel were trading 7.58 percent higher at Rs 667.40 apiece on the BSE.
First Published: Aug 31, 2021 10:26 AM IST
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