Bharti Airtel trades lower for fourth straight day, hits 4-month low

Shares of Bharti Airtel were trading lower for the fourth straight day on Tuesday. The stock was down 4 per cent at Rs 494 on the BSE, hitting a four-month low. The stock of the telecom services provider hit its lowest level of Rs 487.55 on April 29, 2020 in the intra-day trade.

In the past four trading days, shares of the company have underperformed the market by falling 10 per cent, as compared to a 2 per cent decline in the S&P BSE Sensex. Last week, the Supreme Court allowed telecom operators to stagger their adjusted gross revenue (AGR) dues over a period of 10 years, which is lower than the expectation of 15 years asked by Bharti Airtel and Vodafone Idea (VIL).

After the AGR verdict, VIL's board decided to raise up to Rs 25,000 crore from the market, which clearly shows that VIL's intention is not to close the shop. Further, there have reports that said Amazon and Verizon will invest in the company. On Monday, VIL also announced a new brand identity “Vi” (read as “We”).

Analysts at Emkay Global Financial Services have a ‘buy’ rating on Bharti Airtel with the target price of Rs 684 per share. Better subscriber mix, market share gain in the postpaid segment, clear flow-through of tariff hikes, and a strengthening balance sheet are some of the reasons for choosing Bharti as our top pick in the sector, the brokerage firm said in sector update.

Motilal Oswal Securities expects Bharti Airtel to be able to manage the payment with free cash flow (FCF) post-interest of over Rs 10,000 crore/Rs 20,000 crore in FY21/FY22, with no tariff hike built-in and net debt of Rs 1.09 trillion in FY21, including the AGR liability (net debt to EBITDA of 2.8x on pre-Ind-AS 116).

“We believe that with the smartphone market largely settled and prevailing low average revenue per user (ARPUs), there is a strong case for a price hike. However, given the challenging economic environment, we see a limited possibility on an immediate basis,” the brokerage added.