Nifty 50 Stock Soars to ATH on Tariff Hike Anticipation

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Nifty 50 Stock Soars to ATH on Tariff Hike Anticipation
Credit: © Reuters

By Aayush Khanna

Bharti Airtel (NS: BRTI ) touched a 52-week pinnacle at INR 1,073.3 on January 10, following a BofA Securities upgrade to "neutral" and a boosted target price of INR 1,145, implying a 7% upside. The upgrade stems from expectations of a substantial tariff hike within the next year, indicating potential benefits for Bharti Airtel.

BofA Securities analysts foresee a tariff hike of over 20% in 2024 and anticipate heightened capital expenditure (capex) as Bharti aims to enhance handset penetration. As the 5G rollout gains momentum, an accelerated market share shift towards Bharti and Jio is anticipated, despite the stock's current valuation at 9.4x FY25 proportionate EV/EBITDA.

In the last month, Bharti Airtel surged by 5%, outperforming the 2% rise in the benchmark Sensex . Prabhudas Lilladher analysts project a subscriber growth of 3.6 million and a 1.1% QoQ rise in average revenue per user (ARPU) for Bharti Airtel in Q3 FY24. The anticipated Q3FY24 consolidated revenue and EBITDA are expected to escalate by 2.3% and 2% QoQ, respectively.

At 12:15 PM, the stock traded at INR 1,067.75 on the NSE, marking a marginal 0.31% jump from the previous close. Investors keenly await potential tariff adjustments, aligning with the industry's evolving dynamics.

However, one thing should also be noted that the stock has become fairly valued at this price, and investors might be better off waiting for a dip rather than jumping the gun.

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