HSBC has upgraded Bharti Airtel from “Hold” to “Buy,” raising its target price from Rs 1,325 to Rs 1,950. This upgrade reflects the broker’s positive outlook on Bharti Airtel’s growth prospects, driven by several key factors.
HSBC anticipates that Bharti Airtel’s EBITDA and EPS will rise at a compound annual growth rate (CAGR) of 16% and 78%, respectively, over the fiscal years 2024 to 2027. This growth is expected to be fueled by an increase in mobile Average Revenue Per User (ARPU), robust growth in broadband subscriptions, and margin expansion.
Additionally, HSBC forecasts that Bharti Airtel’s capital expenditure intensity will decline, leading to improved free cash flow (FCF) and a reduction in the net debt to EBITDA ratio to 1.5x by fiscal year 2026.
HSBC has maintained its “Hold” rating on Reliance Industries with a target price of Rs 3,010, while keeping a “Reduce” rating on Vodafone Idea with a target price of Rs 7.10.
HSBC identifies home broadband as a key growth driver for the telecom sector, projecting a total addressable market (TAM) of USD 7 billion by fiscal year 2030. The bank also expects mobile ARPU to rise, predicting the next tariff hike will occur in fiscal year 2027.
