Bharti Airtel's Stock Gains Momentum with 5G and Broadband Growth
Bharti Airtel's Positive Stock Rating Upgrade
Recently, Bharti Airtel Ltd (BHARTI:IN) received an optimistic boost when HSBC upgraded its stock rating from Hold to Buy. This upgrade comes with a new price target of INR1,950, a significant increase from the earlier target of INR1,325. This move indicates HSBC's strong belief in Bharti Airtel's future growth, which is particularly promising in its mobile and home broadband sectors.
Boost in Mobile Revenue Projections
HSBC's positive outlook is grounded in revised estimates for mobile Average Revenue Per User (ARPU) for the fiscal year ending in 2027. Alongside this, there is an anticipated increase in home broadband subscribers. The firm predicts that the Total Addressable Market (TAM) will expand with the advent of 5G Fixed Wireless Access (FWA) and an increasing number of fibre-to-the-home (FTTH) connections, both of which are expected to elevate Bharti Airtel's financial performance.
Promising Financial Growth Forecast
The lifted price target of INR1,950 reflects HSBC's updated financial forecasts for Bharti Airtel. The firm estimates that the company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Earnings Per Share (EPS) will see growth rates of 16% and 78% respectively from FY24 to FY27. This positive trend is expected to stem from rising mobile ARPU, a surge in broadband subscriptions, and improving margins.
Decline in Capital Expenditures and Improved Cash Flow
Additionally, HSBC anticipates a decline in capital expenditure intensity for Bharti Airtel, an improvement in Free Cash Flow (FCF), and a reduction in the net debt to EBITDA ratio to 1.5 times by FY26. These financial enhancements are viewed as strong indicators of the company's potential for stability and profitability moving forward.
Market Impact of HSBC's Upgrade
The adjustment in rating from Hold to Buy by HSBC reflects a notable change in expectations regarding Bharti Airtel's stock performance. This upgrade suggests a bullish outlook for the telecom giant, enhancing investor confidence as the company progresses in its growth journey in 5G and broadband services.
Frequently Asked Questions
What did HSBC change about Bharti Airtel's stock rating?
HSBC upgraded Bharti Airtel's stock rating from Hold to Buy, indicating a more positive outlook.
What is the new price target for Bharti Airtel's stock?
The new price target is set at INR1,950, up from the previous target of INR1,325.
Why is HSBC optimistic about Bharti Airtel's growth?
HSBC's optimism is based on increased mobile ARPU and anticipated growth in home broadband subscribers.
How much is Bharti Airtel's EBITDA expected to grow?
Bharti Airtel's EBITDA is projected to grow at a Compound Annual Growth Rate (CAGR) of 16% over the next few years.
What other financial indicators suggest Bharti Airtel's stability?
Indicators include a decrease in capital expenditure intensity and an improvement in Free Cash Flow (FCF).
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