Bernstein reiterates Bharti Airtel Outperform rating, INR1,770 target

On Friday, Bernstein analysts maintained a positive stance on Bharti Airtel (NSE:BRTI) Ltd (BHARTI:IN), reiterating an Outperform rating and a price target of INR1,770.00. The firm highlighted Bharti Airtel’s continued delivery of best-in-class Average Revenue Per User (ARPU), reduced capital expenditures, and robust free cash flow generation as key performance indicators.

Bharti Airtel’s latest quarterly results have been a cause for celebration, according to Bernstein analysts. The company reported a strong subscriber growth that exceeded expectations, with a 5% quarter-over-quarter increase in ARPU to INR 245, outpacing competitor Jio’s 4% growth. This increase was attributed to the effects of tariff hikes and a shift towards higher-value smartphone and postpaid plans.

The wireless subscriber base remained resilient, reaching 356.6 million, an addition of 4.9 million subscribers compared to the previous quarter. Moreover, Bharti Airtel’s mobile revenue saw a 5.8% quarter-over-quarter increase, with EBITDA margins expanding to 58.8%, a 170 basis points improvement from the previous quarter.

A significant reduction in India’s capital expenditures, which fell by 22% year-over-year to INR 79.8 billion, contributed to the operating free cash flow growth of 21.6% quarter-over-quarter and 126% year-over-year. Bernstein analysts anticipate that the positive free cash flow cycle and potential for rising dividends will act as key catalysts for Bharti Airtel, alongside the expected expansion in ARPU.

The analysts’ commentary emphasized Bharti Airtel’s solid performance and the company’s ability to surprise positively in terms of subscriber growth and capital expenditure moderation. The robust ARPU growth and healthy financial metrics position Bharti Airtel favorably in the telecommunications sector, as outlined by Bernstein’s maintained Outperform rating and price target.

In other recent news, Bharti Airtel has been drawing attention following an upgrade from ICICI Securities. The telecommunications company’s stock status was raised from Add to Buy, backed by a positive outlook on its valuation and strong fundamentals. The upgrade underlines Bharti Airtel’s improved performance on key parameters affecting telecom companies’ valuations, hinting at a potential for continued or even enhanced growth.

Bharti Airtel’s enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), adjusted for Indian Accounting Standards (Ind AS), is projected to be 11.3 times for the fiscal year 2026 estimates. This is a noteworthy elevation compared to its Asia-Pacific peers, excluding China, which trade at a median multiple of 7.1 times. The company’s expected EBITDA compound annual growth rate (CAGR) of 14.8% over the next two years also stands out, surpassing the 4.5% CAGR anticipated for its regional competitors.

In terms of free cash flow (FCF) yield, Bharti Airtel’s estimate for fiscal year 2026 is 6.7%, a reasonable figure when compared to the 6% yield of its Asia-Pacific counterparts. These recent developments, including the new price target of INR1,875.00, indicate a favorable outlook for Bharti Airtel, reflecting confidence in its ability to outperform regional competitors based on robust financial projections and potential growth in the telecommunications sector.

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