Kotak Institutional Equities has upgraded Bharti Airtel from its previous 'add' rating to 'buy' rating with an unchanged price target of ₹2,250 per share. According to reports from CNBC TV18, the brokerage projects an upside potential of 26.3% from the stock's previous close. Despite the positive rating change, shares declined on Thursday, trading 1.5% lower at ₹1,755.4. The upgrade comes amid broader market volatility affecting telecom and banking sectors, with telecom stocks facing pressure from regulatory changes while banking stocks fell up to 4% due to RBI's aggressive forex defense measures.
As reported by CNBC TV18, Kotak Institutional Equities highlighted that Bharti Airtel's wireless business performance remains resilient with gradual market share gains and a likely average rate per user (ARPU) hike in the near-term. The company announced crossing the 650 million customers milestone on Thursday, demonstrating strong subscriber growth momentum. This performance comes at a time when the telecom sector faces regulatory challenges, with the latest developments showing mixed reactions from investors and analysts regarding sector-specific developments.
According to the Kotak note reported by CNBC TV18, the company expects three focus areas — homes, enterprise and data centres — to witness accelerated capex spends and growth in the coming years. Most significantly, Bharti Airtel plans to reduce its capex as a percentage of revenue to 21-22% over financial year 2026-2028, compared to 30% historically. This lower capex strategy is expected to drive deleveraging and increase shareholder payouts, positioning the company favorably amid sector-wide capital allocation concerns.
As reported by CNBC TV18, Kotak Institutional Equities believes the concerns around capital allocation in NBFC are overdone and the recent stock price correction makes risk-reward attractive. The stock is currently trading at 8 times its enterprise value (EV)/earnings before interest tax, depreciation and amortization (EBITDA) estimated for the financial year 2028. Among the 31 analysts covering Bharti Airtel, 27 have a 'buy' rating, one has a 'hold' rating, and three have a 'sell' rating. This analyst consensus reflects broader market sentiment toward telecom sector fundamentals despite recent regulatory uncertainties.
According to CNBC TV18, Bharti Airtel shares are down 6.5% over the last 12 months, despite the positive rating upgrade. The stock's current trading price of ₹1,755.4 reflects the market's mixed response to the brokerage's upgrade recommendation, even as the fundamental outlook appears favorable based on the company's strategic capital allocation plans and wireless business performance. The stock's performance comes amid broader market volatility affecting telecom and banking sectors, with investors showing selective interest in specific sector opportunities despite overall market uncertainty.
