Bharti Airtel Share Price Rises After Ratings Boost From HSBC

Bharti Airtel Ltd. has been upgraded to 'buy' from 'hold', by HSBC Global Research. The brokerage has cited a rise in its average revenue per user and strong growth potential in the home broadband segment.

The shares of the telecom major was trading marginally in the green on Wednesday morning. At the time of publishing the stock was up 0.75%.

The brokerage also revised the target price on the stock to Rs 1,950 apiece from Rs 1,325 apiece, implying a potential upside of 15.6% from the previous close of Rs 1,687.40. 

The rating upgrade by HSBC hinges on the expectation that Bharti Airtel’s average revenue per user or ARPU will grow significantly due to anticipated industry-wide 10% tariff hikes in fiscal 2027. ARPU is a metric that measures the revenue generated per user for its telecom services. 

HSBC forecasts that Airtel’s ARPU will rise to Rs 301 by the financial year 2027 from Rs 205 in fiscal 2024, supported by continued subscriber growth and higher adoption of data-intensive plans.

HSBC highlights home broadband as another major growth area for Airtel, expecting the market’s total addressable market to expand to $7 billion by fiscal 2030.

Bharti Airtel is projected to capture 25% of the market by financial year 2030, compared to 19% in 2023-2024. The report notes that the rollout of 5G fixed wireless access helped telecom operators gain market. 

"We think telcos in India are well placed to capture a share of household entertainment spends with their bundled home broadband plans which come with rich content offering. Jio and Bharti Airtel are likely to be key beneficiaries," the note said. 

While Jio leads the home broadband market, Airtel is expected to maintain a strong competitive position in both mobile and broadband segments, according to HSBC.

The continued growth in its mobile ARPU, along with rising broadband subscribers, is expected to drive Ebitad growth at a compound annual growth rate of 16% over fiscal 2024-27.

The commercial launch of 5G fixed wireless access services—Airtel AirFiber and Jio AirFiber— is viewed as a key catalyst for expanding the total addressable market in the home broadband space. This technology is crucial for connecting underserved regions where laying fibre is either commercially unviable or too costly. 

Additionally, the cost of customer premise equipment for 5G FWA has significantly decreased over the last few years, making it more accessible for mass-market adoption in India, the brokerage said.

HSBC noted a few downside risks that could impact Bharti Airtel’s growth trajectory, including weaker-than-expected mobile tariff hikes or lower-than-expected subscriber additions in the broadband segment.

Other risks include increased competition from Reliance Jio in home broadband or unforeseen regulatory changes in the telecom industry. 

Bharti Airtel stock rose as much as 0.80% during the day to Rs 1,731 apiece on the NSE. It was trading 0.52% higher at Rs 1,726.10 per share, compared to a 0.14% decline in the NSE Nifty 50 as of 9:30 a.m.

It has risen 82.17% in the last 12 months and 67.16% year-to-date. The relative strength index was at 64.43.

Twenty six of the 33 analysts tracking the telecom service provider have a 'buy' rating on the stock, five recommend a 'hold' and two suggest a 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential downside of 1.2%.