Bharti Airtel surges 5% on S&P upgrades

Bharti Airtel now carries a stable investment grade rating from all 3 major rating agencies - S&P, Moody's and Fitch.

Bharti Airtel has surged 5% to Rs 300 after Standard & Poor's (S&P) Ratings Services said that it had raised its long-term corporate credit rating on telecommunication services provider to 'BBB-' from 'BB+'.

The rating assigned a stable outlook is also above the credit rating outlook assigned to India by S&P, reflecting the company’s ability to withstand sovereign stress, Bharti Airtel said in a statement.

Bharti Airtel now carries a stable investment grade rating from all 3 major rating agencies – S&P, Moody’s and Fitch, it added.

"We raised the rating to reflect our expectation that Bharti will use its significant free operating cash flows and funds from strategic measures to reduce its leverage to a level that is in line with an intermediate financial risk profile," said Standard & Poor's credit analyst Abhishek Dangra in a press release.

Analyst also believes that the regulatory framework for telecommunication companies in India is improving, and this will reduce the uncertainty and ambiguity that Bharti faced in the past few years.

Further, we anticipate competition to moderate as smaller and weaker players get marginalized due to regulatory developments and cash flow pressures. We expect Bharti's financial performance to improve over the next 12-24 months owing to the company's improving operating performance, deleveraging measures, and controlled capital spending, he adds.

The stock opened at Rs 289 and touched a high of Rs 301 on the BSE. A combined 7.01 million shares changed hands on the counter till noon deals on the BSE and NSE.