Motilal Oswal has given Buy recommendation for Bharti Airtel recommended buy rating on the stock with a target price of Rs 720 in its research with a target price of Rs. 720 in its research report issued on Apr 27, 2021

Motilal Oswal’s research report on Bharti Airtel

BHARTI has been an underperformer despite elevated expectations around business potential/growth. In this note, we highlight our key arguments as to why we believe it offers a good risk-reward equation Despite the COVID woes, Bharti has delivered estimated EBITDA growth of 28% and the trend should continue in FY22E with estimated consol. EBITDA growth of 21%. This should be on the back of steady market share gains; we think, irrespective of a tariff hike, earnings growth should continue to be strong. FCF generation and deleveraging have been a concern for the past 4–6 quarters. However, we are now seeing a more focused approach to drive healthy INR233b FCF (in FY23E) and corresponding deleveraging benefits.

Outlook

The stock looks attractively valued at EV/EBITDA of 6x – as it does not capture the potential tariff hikes and garners 8% FCF yield on an FY23 basis. Maintain Buy, with TP of INR720.

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