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Recent tariff hikes have put the telecom sector back on the investor's radar. And, of all players, Bharti Airtel looks to be the safest bet, considering its global presence. Apart from India, it is present in Sri Lanka, Bangladesh and 16 African nations. This insulates it from onemarket dependence. It is among the few players with more than 90% active user base, which should help new service launches.
The scrip has been consolidating and investors should look at buying around Rs.375 levels for a target price of Rs.500 holding period of 1 year
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Sunday, August 28, 2011
Bharti Airtel
Tuesday, July 26, 2011
Buy Bharti, Idea and RCom on dips
Shares in Idea Cellular Ltd hit its 52-week high of Rs 94.35 in early trade today. At 12:42 PM, shares in the company were trading 7 per cent higher at Rs 91.25.
Shares in Bharti Airtel hit its 52-week high of Rs 428.20 in early trade. At 12:41 PM, shares in the company were trading 3.6 per cent higher at Rs 426.00. "Bharti Airtel Ltd increased tariff by 20 per cent in six circles which fairly contributes 36 per cent to the revenue of the company", says Karan ofICICI Direct in an interview with ET Now.
"Looking at a 20 per cent hike which should probably on the prepaid side it would result in 50-55 bps increase in EBITA margins for the consolidated entity for FY12 and 70% for FY13", adds Karan
According to media reports, Bharti Airtel Ltd is the second telecom player to increasecall rates afterTata Docomo which raised tariffs in one-two circles two months ago to protect falling margins and increasing revenue. The tariff for Bharti Airtel hiked for the first time since October 2009.
Most analysts expect overall impact of 2-3% on revenue per minute (RPM). The RPM is expected to improve from 45 paise to 46-47 paise forBharti Airtel Ltd.
"I was positive on Bharti Airtel Ltd in that sector and continue to remain bullish on that stock even from here on" adds Mehrab Irani, Investment Manager,Tata Investment Corporation Ltd in an interview with ET Now.
"This move particularly on the prepaid side is more positive because the prepaid service was the point where the lots of ARPUs were not so good and they were actually very low", adds Irani.
Telecom shares were in demand after Bharti Airtel raised call tariffs up to 20 per cent in six circles, triggering expectations other firms will follow soon to protect their eroding margins.
"Idea Cellular Ltd and Vodafone might soon get in line to increase their respective prices in near term", adds Karan.
Reliance Communications Ltd shares jumped as much as 6 percent to their highest level in about two weeks. At 12:30 PM, shares in the company were trading 6.5 per cent higher at Rs 99.70 on BSE.
Trading Calls:
"Bharti Airtel Ltd and Idea Cellular Ltd broke out to their fresh 52-week high on back of large volumes. Bharti Airtel will see levels of Rs 435-440 and traders and keep a stop loss of Rs 390-395", says Ashwani Gujral in an interview with ET Now.
"Idea Cellular Ltd has broken out after being in a tight range for several days and can see target of Rs 95-96 and traders can put a stop loss of Rs 78-80.
ICICI Direct maintains a 'BUY' on Bharti Airtel Ltd with a target price of Rs 398 and for Idea Cellular Ltd the brokerage maintains 'HOLD' with a price target of Rs 70.00.
"In case of Bharti Airtel, even current levels are good enough if you are a slightly long term trader which means if you are prepared to wait for a few weeks, you do not mind buying at current prices also", says Sudarshan Sukhani of Technical Trends in an interview with ET Now.
"For very short term traders, you want consolidation, small dips to enter but Bharti has much higher targets ahead, I am not so upbeat on Idea", adds Sudarshan.
Well not all analysts are upbeat on the stock some warn of caution while trading in Bharti Airtel's shares as the prices have already perked up from its 52-week low of Rs 292.70 on 22nd July, 2010.
"The price hike trigger is positive news for Bharti Airtel Ltd of course but in terms of valuation, we have got to be careful", adds Ajay Srivastava, Dimensions Consulting Pvt Ltd in an interview with ET Now.
"It has already gone up quite substantially, so if they are chasing the valuation now, it is at a risk today", adds Ajay. "We are chasing the last leg of the immediate rally in Bharti Airtel, so we have got to be careful when we are buying the stock", adds Ajay.
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Thursday, July 21, 2011
Bharti Airtel - Buy
The company provides services to all 23 telecom circles of India. Bharti's mobile network covers approximately 81 per cent of the country's population. Bharti Airtel has been the leader in market share (on subscriber base) as well as on turnover basis. Also, it generates the maximum Average Revenue Per User.
Bharti vs the telecom industry:
Outperformed the industry's net profit margin in the last 3 years.
Where the industry profit margin has shown a declining trend since 2007, Bharti has mantained a stable net profit margin
Inspite of intense competition, it mantained 20 per cent+ net profit margin in the last 8 quarters
Bharti Airtel has proved itself in the past by performing better than all its peers. It is well-poised for growth in the long term due to the growing telecom market, the competitive advantage of its leadership position and opportunities available in the 3G space.
Competition is giving it a bumpy ride right now, but it is well-armed to fight and remain successful.
Time Span Price Change %Change
Today 395.20 -0.05 -0.01
Week 394.05 1.20 0.30
Month 389.30 5.95 1.52
Three Months 376.60 18.65 4.95
Six Months 336.60 58.65 17.42
One Year 297.00 98.25 33.08
The has been performing well during the last 6 months and is likely to post decent returns. Long Term investors should buy the scrip around 350 levels for a target price of 425 levels
Bought to you by
Ingenious Investor
Equity Research Division
Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084
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sowmya@ravinaconsulting.com
Talk / SMS 08105737966
Read - www.ingeniousinvestor.blogspot.com
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Tuesday, October 26, 2010
Telecom Sector - Avoid
Driven by the seasonality factor, the telecom sector is expected to experience weak show in September quarter. On a sequential basis, while revenue growth will be muted for the sector, a marginal improvement on profit after tax (PAT) due to forex gain is expected, say industry experts.
"The 3.2% appreciation of the rupee over the last quarter should boost the reported profits on account of forex and derivative gains," said IDFC SSKI in a report. Also, with the phasing out of free minutes from the network, minutes of usage will be flat which will further decline average revenue per user (ARPU). Margins of the telcos will be range bound due to lower MoUs, they say. Thus, declining revenue per minute and lower wireless margins will impact profitability in this quarter.
"We expect MoU per subscriber per month to remain flat due to stricter subscriber verification norms and cutting down of free minutes on the network. Industry subscriber additions in the quarter averaged 17.6 million per month. The increase was driven by Uninor, BSNL, Idea and Videocon (VIDEOIND.NS : 265 -0.6
However, subscriber growth of 6-8% quarter on quarter (QoQ) will be largely offset by 3-4% QoQ average revenue per user decline, leading to low-single digit sequential growth in wireless revenue. "We expect the downward trend in average revenue per minute (ARPM) to continue with a 1.8-2.2% QoQ decline for the top three operators-RComm, Idea and Bharti Airtel (BHARTIARTL.BO : 337.2 0
Market leader Bharti Airtel's consolidated revenue is likely to increase 25% on a quarter on quarter basis, mainly driven by consolidation of the Africa business.
"However, consolidated net profit is expected to decline 1.6% QoQ (lower forex loss offset by higher loss from full quarter consolidation for Africa)," said Shobhit Khare and Nirav Poddar from Motilal Oswal in a note.
Idea Cellular is expected to post a 0.7% consolidated QoQ revenue growth. Its margins in established circles is likely to come down QoQ by 100bps. Idea's is expected to post a 16% decline in PAT on QoQ basis.
For Reliance Communications (RComm), we expect revenue to grow sequentially by 1%. Its EBITDA margin is expected to remain stable at 32% led by margin recovery in global and broadband segments. RComm PAT is expected to stay flat QoQ.
While strong voice traffic growth, existing rural and incremental 3G revenue opportunities and potential stabilisation in tariffs will drive sector revenue growth, the potential increase in competitive intensity (given aggression from new entrants and MNP implementation) and adverse regulatory developments remain key concerns for the sector.
Source : FE
Bought to you by
Ingenious Investor
Equity Research Division
Ravina Consulting
No.11 AG Plaza
3rd Cross Kamanahalli
BANGALORE 560084
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sowmya@ravinaconsulting.com
Talk / SMS 08105737966
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Saturday, September 12, 2009
Buy - Bharti Airtel
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