Why Is Nomura Bullish On Bharti Airtel?
Nomura called Bharti Airtel a premium telecom play with solid free cash flow generation. As a result, it expects the dividend payout for shareholders to increase doing forward.
Bharti Airtel’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and Free Cash Flow (FCF) is likely to grow at a Compounded Annual Growth Rate (CAGR) of 14% each over financial year 2029, according to Nomura, who expects this growth courtesy of an expected tariff hike in the third quarter of financial year 2027, operating leverage, and ongoing premiumization.
The brokerage also likes Bharti Airtel’s fundable options in the form of data centers, Airtel Money, lending, cloud, and an increasing stake in subsidiary Indus Towers.
Why Bharti Airtel Should Trade At Premium Valuations?
Nomura has highlighted four reasons to justify Bharti Airtel’s valuation premium to its global peers:
- One is India’s favourable market structure.
- Two is a long runway to grow the Average Revenue Per User (ARPU). Bharti Airtel’s ARPU at the end of the fourth quarter stood at ₹257, from ₹259 in the previous quarter.
- Third is the multiple optionalities compared to global peers as highlighted above, and
- Fourth being possible regulatory tailwinds to support a three-player market.
Bharti Airtel is tracked by 32 analysts, of which, 29 have a “buy” recommendation on the stock, while the remaining three have a “sell” rating.
Shares of Bharti Airtel ended 0.25% lower on Monday at ₹1,846. The stock is down 12% so far this year and by an equal quantum from its 52-week high level of ₹2,174 as well.
