Bharti Airtel stock is expected to rally over 18% on the back of positive impact on revenue due to tariff hikes while Tata Communications stock may rally over 14% in near term.
ICICI Securities remains bullish on Bharti Airtel and Tata Communications as it believes that these two telecom stocks are likely to rally in near term. Bharti Airtel stock is expected to rally over 18% on the back of positive impact on revenue due to tariff hikes while Tata Communications stock may rally over 14% in near term. While mobile services revenue will see a growth of 3-4%, the revenue of telecom companies in Q3FY22 will see steady growth for mobile services as the impact of 20% prepaid tariff hike will be limited for one month. SIM consolidation will drag down subscriber numbers for Bharti Airtel, Vodafone Idea (VIL). However, Reliance Jio will see net add on of subscribers due to the JioPhone Next launch and introduction of Re1 recharge, it said.
Bharti Airtel: Buy
CMP: Rs 700, Target price: Rs Rs 861, Rally: 18.5%
Bharti Airtel stock may rally 18.5% as consolidated EBITDA is expected to be up 2.8% QoQ to Rs 14,200 crore. Airtel’s consolidated revenue is expected to rise 2.5% QoQ to Rs 29,000 crore and EBITDA 2.8%. Net profit for the quarter ending 31 December 2021 is seen at Rs 740 crore. ICICI Securities has a ‘Buy’ rating on the stock with target price of Rs 861.
Tata Communications: Buy
CMP: Rs 1504, Target price: Rs 1750, Rally: 14.01%
Tata Communications (TCom) will see gradual-than-expected recovery in data revenue. The company is likely to report 2.3% hike QoQ in consolidated revenue EBIDTA is expected to go up by 3.5%, and PAT is also likely to be up 2.1% for quarter ending 31 December 2021. The stock has ‘Buy’ rating with target price of Rs 1,750. The stock is likely to rally over 14% to reach the target price.
Meanwhile Vodafone Idea’s EBITDA is expected to rise 0.4%, and revenue 2.6% QoQ due to continued loss of subscribers. Net loss is seen at Rs 7100 crore. On the other hand, Reliance Jio’s EBITDA is expected to go up 5.2% QoQ and revenue is likely to grow 4.3% on tariff hike benefit in mobile services, and consistent addition of FTTH subscribers. Jio’s net profit is likely to jump only 5.6% on recognition of amortisation and interest cost on spectrum bought in the March 2021 auction. While Vodafone Idea stock is currently ‘Under Review’, Reliance Jio stock is unrated by ICICI Securities. The brokerage has a ‘Hold’ rating in Indus towers with target price of Rs 273.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. TheSpuzz Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
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