BHARTI AIRTEL, VODA IDEA STOCKS SLIP INTO RED FROM 52-WEEK HIGHS ON TARIFF HIKES; SHOULD YOU BUY?

Shares of Bharti Airtel hit an all-time high while Vodafone Idea and Indus Towers stocks scaled 52-week peaks in morning deals on June 28 as leading telecom firms in India have started increasing mobile plan tariffs. The stocks, however, gave up gains later in the day and were trading up to 3 percent lower.

According to Morgan Stanley, the tariff hikes are in line with market expectations in terms of timing and magnitude.

Reliance Jio revised tariffs on Thursday, followed by Bharti Airtel, which adjusted rates by 10 percent to 21 percent. Bharti Hexacom's circle rates have also been hiked.

According to Taher Badshah of Invesco Mutual Fund, the hikes were expected within the industry.

In an interview with CNBC TV18, he noted a cautious approach towards spending on spectrum acquisition, suggesting companies that have effectively executed their strategies and delivered strong results have experienced a re-rating in their valuations.

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Analysts at Morgan Stanley estimate a significant increase of 16-18 percent in blended Average Revenue Per User (ARPU) for both Bharti Airtel and Reliance Jio.

Following Jio's tariff adjustments, Bharti Airtel's stock is projected to establish a new price floor in the range of Rs 1,000-Rs 1,050. Looking ahead, the brokerage foresees a potential upside of 11-15 percent assuming current valuation multiples are sustained over the next year based on conservative projections.

CLSA noted that Bharti Airtel and Vodafone Idea tariffs were at a 20-25 percent premium to Jio. Meanwhile, Bernstein feels Vodafone Idea is expected to grow by 20-25 percent. According to JP Morgan, Jio's tariff revision has shifted focus from market share gains.

Jefferies has maintained a Buy rating on Bharti Airtel with a target price of Rs 1,720 per share. The brokerage noted that Reliance Jio's tariff adjustment, excluding feature phone users, indicates a continued focus on expanding its subscriber base. Jio's new tariff plans underscores its heightened focus on monetization strategies.

The international brokerage expects Reliance Jio to achieve 18 percent and 26 percent CAGRs in revenue and PAT respectively from FY24 to FY27. The willingness of Reliance Jio to revise tariffs is viewed positively for the revenue and margin outlooks of both Bharti Airtel and Jio, it added.

Also Read | Bharti Airtel hikes mobile tariffs 10-21%; prices raised up to 70 paise per day on entry plans

Reliance Industries (RIL) stock hit a fresh record high of Rs 3,129.85 on NSE. Jefferies has issued a buy recommendation on the stock, raising its target price to Rs 3,580 per share following Jio's tariff adjustment.

The brokerage has slightly adjusted Jio's estimates for FY25-27 by up to 3 percent, projecting revenue and profit after tax (PAT) compound annual growth rates (CAGRs) of 18 percent and 26 percent respectively from FY24 to FY27.

Additionally, Jefferies made minor tweaks to Reliance Industries' FY25/26 EBITDA estimates, incorporating adjustments based on Jio's financial metrics.

Meanwhile, shares of Indus Towers jumped around 4 percent to hit a 52-week high of Rs 384.80 on the National Stock Exchange (NSE).

Earlier this month, as much as 20 percent equity stake in Indus Towers was sold in block deals, with UK's Vodafone Group selling around 18 percent of that stake. The deals, involving 53.30 crore shares of the mobile tower company was worth a total of Rs 17,065 crore.

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2024-06-28T06:51:29Z dg43tfdfdgfd