Bharti Airtel set to ride its best financial performance phase in over a decade, says Antique; sees over 22% upside

livemint.com:

₹1,505, implying an over 22 percent upside from its CMP of ₹1,229.30, as of April 10. The stock has already delivered almost 59 percent returns in the last one year and gained over 19 percent in 2024 YTD, giving positive returns in 3 of the 4 months of the current calendar year so far. Airtel shares have been flat but in the green in April so far after a 9.4 percent jump in March.

However, it fell 4.1 percent in February but had risen 13.5 percent in January of this year. The scrip also hit its record high of ₹1,244.95 last month on March 22, 2024. The stock is currently just 1.2 percent away from its peak.

It has also advanced over 63 percent from its 52-week low of ₹752.70, hit on April 18, 2023. The brokerage has listed 4 key reasons behind its bullish outlook. Let's take a look.

Tariff hike imminent; Bharti the biggest beneficiary: Antique expects the industry to take a 15–17 percent tariff hike post the elections. The last hike of about 20 percent was in December 2021. Bharti’s industry-leading current ARPU (average revenue per user) of ₹208 is set to go up to ₹286 by end FY27, driven by a tariff hike contributing ₹55, upgradation of 2G customers to 4G contributing ₹10, and customer upgradation to a higher data plan (both 4G and 5G) and moving to postpaid delivering ₹14, it noted.

It also sees Bharti’s subscriber base growing at 2 percent p.a. against industry growth of 1 percent p.a. Capex intensity to fall post the 5G rollout; big jump in free cash flow on cards: As per the brokerage, Bharti Airtel has projected a capex of approximately ₹750 billion for the fiscal years 2024 to 2026, which includes expenses related to the 5G rollout.