On Friday, ICICI Securities analyst issued an upgrade for Bharti Airtel (NS:BRTI) Ltd (BHARTI:IN) from Add to Buy, setting a price target at INR1,875.00. The upgrade reflects a positive outlook on the company's valuation, supported by strong fundamentals. Bharti Airtel's performance on five key parameters that influence telecommunications companies' valuations has shown significant improvement, which may continue or even get better.
According to the analysis, Bharti Airtel's enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) adjusted for Indian Accounting Standards (Ind AS) is projected at 11.3 times for the fiscal year 2026 estimates.
This valuation is notably higher than its Asia-Pacific (excluding China) peers, which trade at a median multiple of 7.1 times. The higher valuation is justified by Bharti Airtel's expected EBITDA compound annual growth rate (CAGR) of 14.8% over the next two years, which surpasses the 4.5% CAGR anticipated for its APAC peers.
The analyst prefers to compare telecommunications companies based on free cash flow (FCF) yield, a measure of how much cash a company generates relative to its share price. Bharti Airtel's FCF yield for the fiscal year 2026 estimate is 6.7%, which is considered reasonable when compared to the 6% yield for its APAC counterparts.
The upgrade to Buy indicates a confidence in Bharti Airtel's ability to outperform its regional competitors, based on its solid financial projections and the company's potential for continued growth in the telecommunications sector. The new price target of INR1,875.00 suggests a favorable outlook for the stock's performance.
In other recent news, Bharti Airtel has been the target of positive analyst attention due to robust earnings and revenue growth. Bernstein SocGen maintained an Outperform rating and increased the price target for Bharti Airtel, citing potential benefits from tariff hikes and market consolidation. In the same vein, Axis Capital (NYSE:AXS) Limited, Jefferies, and Citi also increased their price targets, referencing growth in different sectors and the potential impact of upcoming tariff hikes.
Airtel Payments Bank, owned by Bharti Airtel, reported a significant 32% year-over-year increase in monthly transacting users and a 43% rise in gross merchandise value. The bank's earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 102% compared to the same period last year.
CLSA reiterated its Outperform rating on Bharti Airtel, highlighting the company's strong free cash flow. The firm's analysis does not factor in the added value from Airtel Payments Bank, despite Bharti Airtel owning a 73% stake in the bank.
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