Technically, Bharti Airtel (CMP: 381) has immediate positional support of around 370-367 area & sustain below that it could again drift to 354-340 zone. Consecutive closing below 340, it may dip to 326-311 and sustain below that 292-279 territory could be the target on further downside (low probability except under worst bear market scenerio).
On the upside, sustain above 370-383 zone, immediate target may be 397 & above that, it could scale 410-425-440 in the short to mid term. In the long term, only a consecutive closing above 425-440 zone, it could target 485-500-600 area (FY:16-17; under bull market scenerio).
Bottom line (Cyclical Trading Levels):
311-326-340-354-370-383-397-410-425-440
Yesterday's cut in roaming tariffs by telecos, including Bharti is by & large expected by the market. Definitely there would be some impact on telecos revenue (around 2-4% negative impact on EBITDA as par various analysts), but this might be offset by higher usages by roaming subscribers.
Bharti Airtel and other telecom stocks (like Idea) fall recently despite some improved Q4 parameters, specially sequentially higher ARPU (Average Revenue Per User). This may be largely because of expected huge balance sheet debt as a result of costly spectrum auction. But, Bharti is trying hard to de-leverage by selling non-core assets.
Also, to make it worst, voice revenue, which may be the bread & butter of telcos, including Bharti dipped significantly as a result of OTT (Over-The-Top) operators in the age of increasing VoIP/WA etc. Although data revenue is increasing quite significantly (70.4% YOY for Bharti), its not sufficient enough to cover falling yield for voice revenue. To make it up, data charges need to be hiked by 6-10 times & telecos are lobbying hard for it. We might see some hikes in it in the coming days.
To make it worse, Bharti posted its Q4 result which was some what below street estimate. Its African business, higher finance costs & Forex losses also caused a drag in its overall consolidated numbers.
Going ahead, Bharti is banking largely on 3G & 4G services in India & on Africa, its taking various initiatives to revamp its operations, including data services. Also "Digital India" theme along with mobile data boom may help the telecos, including Bharti. In the coming days, significant consolidation may also happen in the telecom industry, once clear M&A rules are in the place. Considering the abnormal high costs of spectrum, its paucity, falling call charges & steep competition from smaller players, telecom business may be only suitable in India for companies having very deep pockets and Bharti, undoubtedly is few of them. Consolidation is bound to happen for telecos in India. Also there is a definitive telecom regulatory environment in India, specially after 2G scam uncertainty.
As par quick BG metrics of TF model, median valuation of Bharti is around 425 as par the current TTM EPS. Projected value is around 485-550 (FY:16-17), under the current market conditions.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| BHARTIARTL | 33.02 | 166.93 | 14.29 | 418.62 | 432.28 | 425.45 | 371.39 | 396.02 |
| BHARTIARTL | 42.76 | 190.3 | 14.29 | 476.38 | 491.92 | 484.15 | 371.39 | 396.02 |
| BHARTIARTL | 55.35 | 217 | 14.29 | 541.99 | 559.67 | 550.83 | 371.39 | 396.02 |
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