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Bharti Airtel shares rise 2% after telco's board approves Rs 21,000-crore rights issue

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CLSA, UBS and Jefferies are positive on Bharti Airtel's move to raise Rs 21,000 crore through a rights issue.

Bharti Airtel shares rise 2% after telco's board approves Rs 21,000-crore rights issue
Bharti Airtel share price surged two percent on Monday after the telecom company's board gave a nod to its fundraising plans. The telco aims to raise up to Rs 21,000 crore with Bharti's board on Sunday approving the rights issue at a price of Rs 535 per share. Airtel's fundraising move is likely to give more firepower to the company as it takes on rivals in a fiercely competitive telecom market.
India, the world's second-largest telecom market and the biggest data consumer, is now gearing up for 5G that will significantly scale up connectivity pipes, enabling ultra-high-speeds and new-age applications for users, and new revenue streams for players.
Bharti Airtel shares rose as much as 1.94 percent to Rs 605.50 apiece on BSE in early deals. At 9:40 am, the stock traded with a gain of 1.61 percent at Rs 603.50 apiece on the bourse, outperforming the benchmark Sensex index, which was up 0.71 percent and near an all-time high touched earlier on Monday. The sectoral S&P BSE Telecom index was up 1.48 percent.
Among the brokerages positive on Bharti Airtel are Jefferies, UBS and CLSA. Here's what they said:
Jefferies 
The plan to raise Rs 21,000 crore through a rights issue bodes well for Bharti Airtel, and allays concerns around the promoters' intent, according to the brokerage. The issue, which comes at a 10 percent discount to the current market price, rewards existing shareholders, said Jefferies, which has maintained a 'buy' rating on the stock with a target price of Rs 685. The telecom company's market share gains are set to accelerate, it added.
CLSA
The rights issue and call options create headroom for the company especially in the event that the government advances its 5G spectrum auctions, according to the brokerage, which has a 'buy' call on the Bharti Airtel stock with a target price of Rs 780 apiece. The company's market share performance is commendable, according to CLSA.
UBS 
The rights issue is expected to strengthen Bharti Airtel's balance sheet for 5G investments including the spectrum auction, according to the brokerage, which has maintained a 'buy' rating on the stock for a target price of Rs 655. Airtel's net debt-to-EBITDA ratio is expected to come down further, according to UBS.