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Bharti Airtel, Vodafone Idea, Indus Tower shares jump; CLSA raises target prices

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Bharti Airtel, Vodafone Idea, Indus Tower shares jump; CLSA raises target prices

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Bharti Airtel shares rose after CLSA said the telecom company is its top pick in the sector. Vodafone Idea and Indus Tower shares also moved higher after CLSA raised its target prices for the companies. Telecom stocks were in focus after the brokerage said the sector's revenue will continue to grow in 2022.

Bharti Airtel and Vodafone Idea shares gained on Thursday, as telecom stocks were in focus after CLSA said it expects the sector to grow further this year. The brokerage said the sector's revenue grew 15 percent on a year-on-year basis in 2021.
Bharti Airtel shares rose 1.5 percent to Rs 710.3 apiece on BSE, after CLSA said the private sector telecom company is its top pick in the sector. The brokerage raised its target price for Bharti Airtel to Rs 910 from Rs 863.
It expects Bharti Airtel to continue to perform well going forward. The stock is trading at a 13 percent discount to five-year average valuations heading into a catalyst year, CLSA said.
Vodafone Idea shares gained 1.3 percent to settle at Rs 15.3 apiece for the day. The brokerage raised its target price for Vi to Rs 16 from Rs 11. It also said the government's mega relief package last year averted a financial crisis at Vodafone Idea.
StockRatingTarget price
Bharti AirtelBuy910
Indus TowerBuy360
Vodafone IdeaUnderperform16
Tata CommunicationsOutperform1,660
Sterlite TechBuy363
Indus Towers climbed up 2.2 percent to shut shop at Rs 261.9. CLSA raised its target price for Indus Tower to Rs 360 from Rs 340.
Tata Teleservices jumped five percent and GTL Infra almost three percent. On the other hand, Tata Communications, Sterlite Tech and Route Mobile were down close to two percent each.
CLSA raised its target price for Tata Communications to Rs 1,660 from Rs 1,570. The brokerage, however, reduced its target price for Sterlite Tech to Rs 363 from Rs 393.
Laying out its outlook for 2022, CLSA said the Indian mobile market will have three key trends:
  • Sector revenue to grow again after 15 percent YoY expansion in 2021
  • After mega package, AGR dues to likely be reviewed led by incumbents’ petitions
  • 5G transition will commence in 2022 with cut in spectrum prices
  • According to CLSA, the New Year will see big events led by the auction of 5G spectrum, and a possible IPO of Jio. Reliance Jio is the telecom arm of Reliance Industries.
    The telecom sector's revenue will grow in 2022 with prepaid tariff hikes by Bharti Airtel, Vodafone Idea and Reliance Jio, and 4G mobile data penetration reaching 83 percent by FY24CL, according to CLSA.
    The brokerage has factored in 20 percent tariff hikes for Bharti Airtel, Vodafone Idea and Reliance Jio from the second half of FY22 to FY24. It has forecast a 13 percent CAGR in the India mobile revenues to Rs 2,50,300 crore by FY24CL.
    "Rising mobile ARPU, 4G penetration, a potential AGR review and the next spectrum EMI due in FY26 will allow sector improvements... Pricing-led competition is easing and even as we forecast RJio revenue share to reach 44 percent by FY24, we also foresee upside potential to Bharti's 34 percent share," it added.
    Note To Readers

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