Kotak Institutional Equities remains positive on Bharti Airtel, said Tarun Lakhotia, Director at the domestic brokerage firm on Thursday. The fair value is seen at Rs 700-1,100 depending on how the sector evolves, he added. His comments come at a time when Bharti Airtel will acquire a 20 percent stake in Direct-to-Home (DTH) arm Bharti Telemedia from Warburg Pincus. The deal is valued at Rs 3,126 crore and DTH will now become a 100 percent subsidiary of Bharti.
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Speaking in an interview with CNBC-TV18, Lakhotia said, “We have been positive on Bharti Airtel for a while and the 2-3 scenarios that the telecom sector in India may evolve into in the next 3-5 years, Bharti would definitely be a beneficiary in all of those scenarios. Therefore, Bharti’s fair value could be between Rs 700 on the lower side to about Rs 1,000-1,100 on the higher side and we think a good value will be generated depending on how the telecom sector evolves in the next 2-3 years.”
On the business front, Lakhotia said, “Earlier their focus was on the wireless telecom side while digital offerings were on the periphery, but now there is a clear indication from the company that they are bringing all the digital offerings to the core of their services. So that’s where value generation could happen.”
“However, difficult to give a number, but valuation multiple that the stock is going to trade at could be a lot higher versus a normal telecom business could be once this digital asset shape up in a bigger way in next 3-5 years,” said Lakhotia.
He doesn’t expect the listing of Jio or Bharti Digital assets to happen for the next couple of years.
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes CNBCTV18.com.
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