Airtel Can Gain 62%; Life will be Difficult for Vodafone Idea, says Credit Suisse

By Aditya Raghunath

Investing.com -- A report by foreign brokerage Credit Suisse (SIX: CSGN ) has indicated that the fortunes of Bharti Airtel Ltd. (NS: BRTI ) and Vodafone Idea Ltd (NS: VODA ) couldn’t be more divergent.

The report says that Airtel will be “well-placed”, in either scenario, a two-private operator system or a three-private player field. “Under a two-private-operator scenario, we expect Airtel's subscriber market share to reach 40% and ARPU (average revenue per user) to increase to Rs 200...," it said.

"We believe the company will also emerge as one of the key beneficiaries of the relief measures being discussed," it added.

It added that investors are re-evaluating Bharti Airtel and Indus Towers Ltd (NS: INUS ).  

It said, “In the event of BSNL taking over or government control [of Vodafone Idea], we forecast a valuation of Rs 840 per share for Airtel and Rs 190 per share for Indus. For RIL, a two-player scenario can potentially add 10% to its market price, while the Scenario 2 can add five percent." Bharti Airtel stock is trading at Rs 621 as of this report.

Vodafone Idea, on the other hand, will continue to remain under pressure. "Our analysis of VIL's cash flows suggests its situation will remain challenging even after the relief measures. VIL needs meaningful capital infusion (with long gestation period) to become competitive," said the report.