Is this the right time to buy Bharti Airtel?
Updated On: August 28, 2012 08:21 (IST)
New Delhi:
Shares in mobile carrier Bharti Airtel traded at the top of the Nifty index Monday. The poster boy of India's telecom sector gained over 1.5 per cent today after falling nearly 15 per cent since reporting a 10th straight quarter of declining profits on August 8.
Suresh A Mahadevan, head of India equities at global brokerage firm UBS Securities told NDTV Profit that Bharti share prices may double over the next three years.
Here are some of the reasons for the likely upside:
1) 2G bidding may not be successful: The government is planning to hold the 2G auction in November after the Supreme Court revoked all permits awarded to eight of Bharti's rivals in a scandal-tainted 2008 sale. The auction had been due by end-August, but the telecom ministry is seeking a delay until November as it finalises the bidding rules and the process.
UBS says the auctions in November- December will be crucial. For the top eight service areas, there is no business case for anybody to bid. So if the government doesn't get any bid, that's a message that this industry is going to consolidate.
2) Post November consolidation: Companies that won fresh spectrum in 2008-09 are far from an ebidta break even and at the new auction prices it will be even more difficult for them to get ebidta even, UBS said. So there is no logic for them to bid and consolidation is inevitable.[RELATED-STORIES]
3) Bharti, Vodafone and Idea to benefit: The consumer has chosen these three brands out of 10 or 12 choices they have. So whoever has the consumers will benefit, UBS added. At some point prices will go up and Bharti and Idea share prices can double in the next three years, the brokerage said.
4) HSBC says threats from LTE (read 4G) are overdone for Bharti. Continue to prefer Bharti in the Indian telcos space. Focused approach should drive equilibrium. The global banking major has retained its "overweight" call on the stock.
5) Bharti's sales have risen 1.1 per cent in the June quarter reversing a nine quarter decline.
http://profit.ndtv.com/news/market/article-is-this-the-right-time-to-buy-bharti-airtel-309944/?q=/news/l/id/309944&pfrom=home-topstory
Suresh A Mahadevan, head of India equities at global brokerage firm UBS Securities told NDTV Profit that Bharti share prices may double over the next three years.
Here are some of the reasons for the likely upside:
1) 2G bidding may not be successful: The government is planning to hold the 2G auction in November after the Supreme Court revoked all permits awarded to eight of Bharti's rivals in a scandal-tainted 2008 sale. The auction had been due by end-August, but the telecom ministry is seeking a delay until November as it finalises the bidding rules and the process.
UBS says the auctions in November- December will be crucial. For the top eight service areas, there is no business case for anybody to bid. So if the government doesn't get any bid, that's a message that this industry is going to consolidate.
2) Post November consolidation: Companies that won fresh spectrum in 2008-09 are far from an ebidta break even and at the new auction prices it will be even more difficult for them to get ebidta even, UBS said. So there is no logic for them to bid and consolidation is inevitable.[RELATED-STORIES]
3) Bharti, Vodafone and Idea to benefit: The consumer has chosen these three brands out of 10 or 12 choices they have. So whoever has the consumers will benefit, UBS added. At some point prices will go up and Bharti and Idea share prices can double in the next three years, the brokerage said.
4) HSBC says threats from LTE (read 4G) are overdone for Bharti. Continue to prefer Bharti in the Indian telcos space. Focused approach should drive equilibrium. The global banking major has retained its "overweight" call on the stock.
5) Bharti's sales have risen 1.1 per cent in the June quarter reversing a nine quarter decline.
http://profit.ndtv.com/news/market/article-is-this-the-right-time-to-buy-bharti-airtel-309944/?q=/news/l/id/309944&pfrom=home-topstory
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