Bharti Airtel With the stabilisation of tariffs in the hyper competitive Indian telecom market and the improving performance of its loss-making African operations, Bharti Airtel is likely to turn in a 24 per cent jump in earnings over the FY11-13 period. The key challenge for the company will be to improve its African operations’ Ebitda margin of 25 per cent (Indian operations have an Ebitda of 37 per cent) by improving network volumes and the subscriber base. With 3G rolled out across the country, the share of non-voice revenues currently at 14 per cent is likely to move up and improve profitability (average monthly revenues per subscriber for non-voice are five time those of voice). What makes the company stand apart from its peers is the low debt-equity ratio of 1.3 times, which will ensure adequate cash for expansion and customer acquisition given its estimated free cash flow in 2012-13 of Rs 10,000 crore.
Infosys Outperformance by TCS on both the revenue and the margin front has resulted in its stock commanding premium valuations over Infosys. While this valuation gap may prevail in the medium term, a higher exposure to the lucrative enterprise application services segment (enjoys a better realisation and margin) coupled with the ability to consistently sustain margins is a key positive for Infosys. The company will also be a key beneficiary of the pick-up in discretionary/transformational spends by clients in key markets like the US. While Infosys remains the top pick of most brokerages in the IT space, a higher earnings growth and lower valuations provide cushion.
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Jindal Steel & Power (JSPL) JSPL, which is an integrated player in the steel and power segment, is expected to witness str