Bharti Airtel: Tariff hike key trigger; Morgan Stanley 'OW' for 34% upside

Airtel share price target: Morgan Stanley said the key catalyst for stronger earnings remains a tariff hike, which may be announced in November or December this year.

Airtel share price target: Morgan Stanley expects Bharti Airtel to deliver steady performance in the June quarter (Q1FY27) as it has maintained an 'Overweight' rating on the stock. The brokerage said that Q1 saw steady execution and that tariff hike intervention in late 2026 would drive growth acceleration, improve return on capital employed (ROCE), and generate strong FCF/dividend payouts over F26-29e.

 

The brokerage has set a target price of ₹2,480 for the telecom major, implying a 34 per cent upside from its previous close of ₹1,852.

 

During Wednesday's trade, Airtel shares gained 1.35 per cent to quote at ₹1,877 on the National Stock Exchange (NSE) around 12:15 PM.

 

 

Morgan Stanley said that it expects Bharti Airtel's Indian mobile services revenue to grow by 7.8 per cent Y-o-Y to ₹295 billion in Q1, driven by a 2 per cent rise in average revenue per user (ARPU) growth on continued upgrades by subscribers from 2G to 4G, shift from prepaid to postpaid plans, and data monetisation.

 

The brokerage expects Airtel's India mobile business to add around 3.5 million subscribers and around 5 million 4G subscribers Q-o-Q. Ebitda margin is expected at 60.7 per cent, up12 bps Q-o-Q.  Check - TOP GAINERS NSE | TOP LOSERS NSE

 

Tariff hike like in Nov-Dec  It said the key catalyst for stronger earnings remains a tariff hike, which may be announced in November or December this year. 

 

"Tariff hike remains the key catalyst to drive revenues in this segment and we have assumed a 16-20 per cent hike for 4G/5G plans, in November/December 2026," Morgan Stanley said.

 

The brokerage said that Airtel's non-mobile businesses (home broadband, enterprise segment, and DTH) will continue outpacing its mobile business in the absence of tariff hikes.

 

"We believe that from here, non-mobile businesses will grow faster than mobile business, with their revenue CAGR for F26-29e at 19 per cent vs Indian mobile business revenue CAGR at 12 per cent," the brokerage said.

 

The Africa business could report 29.1 per cent Y-o-Y rise in revenue to $1,827 million, helped by an extra day in the quarter and currency tailwinds in Zambia and Nigeria. Ebitda is projected at $915 million, while Ebitda margin at 50.1 per cent.

 

At the consolidated level, Morgan Stanley estimates revenue to grow by 17.2 per cent Y-o-Y to ₹580 billion and Ebitda to increase by 17.4 per cent to ₹331 billion. The company's profit is projected at ₹75 billion in the quarter.

 

Capex expectations

 

Morgan Stanley expects capex for the Indian core business of ₹86 billion and ₹135 billion for the consolidated business. For F27, however, it estimates average capex for the Indian core business of around $4.2 billion, including capex towards data center investments, which could be unevenly spread across quarters.

 

The brokerage assumes capex to increase also because of investments towards its NBFC business, per the plans announced by the company.   =========================================== 

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