Bharti Airtel surges 6% on DoT nod for 100% FDI in downstream investments

Post revision of its foreign investor limit, Airtel's weightage in MSCI should go up, resulting in significant inflows into the stock

Shares of Bharti Airtel surged 6 per cent to Rs 600 on the BSE in Wednesday's early morning trade after the company said it has received required regulatory approvals for 100 per cent foreign direct investment (FDI) in its downstream companies. The company said it is initiating the process to revise its foreign investment limit to 100 per cent, with immediate effect.

The telecom services company' has rallied 10 per cent in the past two trading days. It was trading close to its 52-week high level of Rs 612 touched on May 20, 2020.

“In compliance of the FDI approval dated January 20, 2020 granted to the company by the Department of Telecommunications (DoT), the company has received approvals for its relevant downstream investments. Accordingly, the company is initiating the process to revise its foreign investment limit, as notified to its depositories, to 100 per cent with immediate effect,” Bharti Airtel said in an exchange filing on Monday after market hours. READ HERE

Post revision of its foreign investor limit, its weightage in MSCI should go up, resulting in significant inflows into the stock, ICICI Securities said in a note.

The brokerage expects Bharti Airtel to lead subscriber addition in the October-December quarter (Q3FY21) aided by Vodafone Idea churn and challenges faced by the new operator due to farmer's protest.

“The reported ARPU (average revenue per user) is likely to witness around 2 per cent QoQ growth at Rs 165, aided by higher data-based usage upgrades. Meanwhile, Indian wireless revenues are expected to witness 5.3 per cent QoQ growth at Rs 14,565 crore. India non-wireless revenues traction may also remain robust, especially broadband and enterprise," the brokerage firm said in result preview.

"We expect India EBITDA margins at 44.8 per cent, down 100 basis points (bps) QoQ owing to tower exclusion (up 50 bps on an adjusted basis). Africa margins are expected to be stable QoQ at 45 per cent," the brokerage said. Commentary on ARPU trajectory and non-wireless business are key monitorables, it added. The brokerage has a 'buy' rating on Bharti Airtel with a target price of Rs 700 per share.