Stock Analysis - Bharti Airtel

Stock price target based on Bharti Airtel’s 3QFY12 results. The stock had a run from 320 to 400 and then back to 360 in past 2 months in line with run up of Indian stock markets. One may still buy stocks of Bharti Airtel but the stock price target will not be a significant upside from one year point of view.

Bharti Airtel had reported disappointing numbers for 3QFY12 because of weak minutes of usage (MoU) and several one offs, which hit revenue and cost. However, strong ARPM growth is the key positive for the quarter. Revenue from African operations was in line but margins remained under pressure.

As we all are witnessing Telecom spectrum scam and court orders of license suspension, telecom as industry is expected to consolidate from here. Also, Indian consumers are moving towards smart phone technology to use data on phones and this data usage will increase with time. Telecom players like Bharti Airtel would be big beneficiaries of this data usage growth and telecom sector consolidation.

Bharti has growth prospects in terms of 3G spectrum, DTH, African company it took over and potential growth in markets which are under penetrated.

With no doubt, Bharti Airtel is the best stock to buy from telecom sector in India with stable business and good balance sheet numbers. The target stock price for Bharti Airtel over the one year time period would be around Rs.400. One who is looking for moderate appreciation with less volatility and least risk in stock markets may buy stocks of Bharti Airtel.

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