Bharti Infratel extends rally on heavy volumes, surges 30% in 6 days

The stock was trading higher for the sixth straight day

Shares of Bharti Infratel were trading higher for the sixth straight day, up 7 per cent to Rs 209 on the BSE on Thursday on the back of heavy volumes.

The stock of telecom services provider soared 30 per cent in the past six trading days, as compared to a 1.5 per cent decline in the S&P BSE Sensex. The trading volumes on the counter nearly doubled today with a combined 15.9 million shares changing hands on the NSE and BSE till 02:07 pm.

Bharti Infratel is a provider of tower and related infrastructure, and deploys, owns and manages telecom towers and communication structures for various mobile operators. The Company’s consolidated portfolio consists of over 90,000 telecom towers.

The board of directors at their meeting held on April 23, 2020 had took note of the status of scheme of arrangement between Indus and Bharti Infratel and have further extended the long stop date till June 24, 2020, subject to agreement on closing adjustments and other conditions precedent for closing, with each party retaining the right to terminate and withdraw the scheme.

Bharti Infratel, in which Bharti Airtel has 53.5 per cent stake, owns and operates over 40,000 towers. It holds 42 per cent in Indus Towers, which is a tri-partite joint venture (JV) between Bharti Infratel, Vodafone, and Vodafone Idea in the ratio 42:42:11.

The stock of Bharti Infratel had turned ex-date for interim dividend for Rs 4.10 on May 5, 2020. The company paid a total dividend of Rs10.5 per equity share of Rs 10 each for financial year 2019-20.

Analysts at Edelweiss Securities expect tenancy cancellations to taper down over the next two quarters and a much-improved gross tenancy addition to start reflecting in net tenancy additions accordingly. The brokerage firm has ‘buy’ rating on the stock with the target price of Rs 235 per share as it expects the government to step in and offer a staggered payment option, which would help sustain the current industry structure.

Analysts at Emkay Global Financial Services believe that the higher dividend yield on FY21E should restrict meaningful downside in the near term, while the sharp market correction and the above-stated factors should keep valuations under check.

Although gross tenancy additions improved, continued exits impacted net tenancy additions for the quarter. Incremental tenancies would be largely dependent on only two operators as concerns still remain on the possibility of continued subscriber and revenue market share losses of Vodafone Idea. In addition, any delay in Indus merger for almost the fourth time, with long stop date being pushed to 24th June, despite receiving all regulatory approvals, paint a negative picture, in our opinion, the brokerage firm said in result update.