Bharti Airtel (CMP:348) was lackluster and also an under performer in our market for the last few years.Now, the situation in telecom is rapidly changing with clear policy framework such as spectrum auction is in place. Bharti is fast deleveraging its tower business in Africa and India to fund its spectrum auction and balance sheet debt. It is also India's largest and world's fourth largest telecom operator. Apart from competition form Vodafone and RCOM, the latest entrant, Reliance Jio (in 4G) may put some competition to Bharti. It also signed a pact for 4G/5G technology with China Mobile recently.
Going ahead, telecom operations in India may be a costly affair as a result of extremely high price of spectrum & comparatively low call/data rates and only large players having deep pockets may survive in the long run. Some consolidation in the telecom space may well be on the card. Bharti is also facing expiring of its existing spectrum in six circles this year contributing around 35% of its revenue. So, the ongoing spectrum auction process is also vital for them along with management of its balance sheet debt.
Looking at the chart, sustain above 361-368 zone, Bharti may target 387- 397 zone in the short term and consecutive closing above 387, it may touch 420-440 area by mid term. Its long term (FY:2016-17) target may be around 600 (if able to sustain over 420 zone).
On the downside, 340-335 is a strong support zone and below that 325 area should offer positional support under the current market conditions.
As par, BG model, its techno/funda median value is around 362 (standalone data) and its EV/EBITDA(TTM) is around 6.46 under the current market scenario.
| SCRIP | EPS(TTM) | BV(Act) | P/E(INDS) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| BHARTIARTL | 28.61 | 166.93 | 12.9 | 365.05 | 358.81 | 361.93 | 361.07 | 348.83 |
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