Positive on Bharti Airtel; fair value seen at Rs 700-1100, says Kotak Equities’ Tarun Lakhotia

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.

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.

Watch the video for more