On Tuesday, Bharti Airtel Ltd (BHARTI:IN) stock received a positive assessment from HSBC, as the firm upgraded its stock rating from Hold to Buy, increasing the price target significantly to INR1,950.00, up from the previous INR1,325.00. The upgrade reflects HSBC's confidence in Bharti Airtel's growth prospects, particularly in its mobile and home broadband services.
HSBC's optimism is based on the raised mobile Average Revenue Per User (ARPU) estimates for the fiscal year ending in 2027 (FY27e) and an increased forecast for home broadband subscribers. The firm anticipates the Total Addressable Market (TAM) to grow with the expansion of 5G Fixed Wireless Access (FWA) and a rise in fibre-to-the-home (FTTH) connections, which is expected to boost Bharti Airtel's financial performance.
The revised price target to INR1,950 is a result of the elevated forecasts. HSBC projects that Bharti Airtel’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Earnings Per Share (EPS) will grow at a Compound Annual Growth Rate (CAGR) of 16% and 78% respectively over the period from FY24 to FY27e. This growth is anticipated to be driven by an increase in mobile ARPU, strong growth in broadband subscriptions, and margin expansion.
Furthermore, HSBC expects Bharti Airtel to experience a decline in capital expenditure intensity, an improvement in Free Cash Flow (FCF), and a reduction in the net debt to EBITDA ratio to 1.5 times by FY26e. This financial strengthening is seen as a positive indicator of the company's future stability and profitability.
The upgrade to Buy from Hold by HSBC signifies a significant shift in expectation for Bharti Airtel's stock performance, suggesting a bullish outlook for the telecom giant in the coming years.
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