On Friday, Citi has increased its price target on Bharti Airtel Ltd (BHARTI:IN) to INR1,750 from INR1,520, while keeping a Buy rating on the stock. This adjustment follows the recent tariff hikes by competitor Jio, which are expected to be matched by Bharti Airtel and Voda Idea soon.
The revised price target reflects a 15% increase from the previous figure. The upward revision is attributed to a series of factors starting with an anticipated 2-5% rise in Bharti Airtel's average revenue per user (ARPU) estimates for the fiscal years 2025 to 2027. These projections are based on the higher-than-expected tariff hikes by Jio.
In addition to the ARPU adjustments, Citi has also increased the target enterprise value to EBITDA (EV/EBITDA) multiple for Bharti Airtel's India business from 11x to 12x. This change is due to the improving dynamics within the telecom industry, including signs of diminishing competitive intensity, Jio's new focus on monetization, and government support that is now clearly evident.
Finally, the new target takes into account recent updates to Citi's model for Airtel Africa, which is part of Bharti Airtel's international portfolio. The comprehensive analysis by Citi suggests a positive outlook for Bharti Airtel, underpinned by the company's strategic moves and favorable market conditions.
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