Bharti Airtel eyes Rs 350 ARPU: Morgan Stanley retains Overweight, check target
Bharti Airtel shares may remain in focus after Morgan Stanley maintained its Overweight rating on the telecom major, with a target price of Rs 2,442 per share, implying an upside of about 30 per cent from the current market price (CMP) of Rs 1,878.
The global brokerage's view comes as Airtel continues to see room for growth across its mobile, home broadband and digital businesses, while maintaining a disciplined approach towards capital allocation.
Airtel sees ARPU growth even without tariff hike
Airtel management believes there is scope for 5-6 per cent annual growth in average revenue per user (ARPU) even without any tariff increase. The company also reiterated its medium-term aspiration of reaching a mobile ARPU of Rs 350.
ARPU growth remains a key earnings driver for telecom companies, particularly as the industry focuses on improving monetisation from existing subscribers.
Singtel reiterates stake equalisation goal
Meanwhile, Singtel reiterated its long-term objective of equalising its stake in Bharti Airtel with that of the Indian promoter family. However, the company stressed that there is no urgency to achieve this objective.
The commentary could keep investor attention on the company's shareholding structure, although Singtel's indication suggests that any stake-related move is unlikely to be driven by immediate timelines.
Home broadband opportunity remains significant
Airtel sees an industry opportunity of around 30-40 million incremental homes over the next four to five years and plans to capture its fair share of this market.
The expanding home broadband opportunity could provide another growth avenue for the company alongside its core mobile business, as demand for high-speed connectivity continues to increase.
Digital businesses gain traction
Digital businesses now contribute around 20 per cent of Airtel's enterprise revenues and are growing at more than 20 per cent, according to management.
Growth is being led by segments such as cloud, Internet of Things (IoT) and other digital services, highlighting Airtel's efforts to expand beyond its traditional connectivity business.
Focus remains on core business and shareholder returns
On capital allocation, Airtel management said it will prioritise investments in its core business and progressive dividends before allocating capital towards its three new growth ventures.
