Bharti Airtel Gets A Target Price Upgrade On Tariff Hike Expectations

Bharti Airtel Ltd.'s stock received a target price hike from Jefferies on expectations of a better competitive advantage and likely telecom tariff hikes in the next two years that will boost earnings.

The firm maintained 'buy' rating on the stock and increased the target price from Rs 1,760 to Rs 1,970, implying a potential upside of 20.5% on the previous close.

"Jio's rising focus on growth and VIL's (Vodafone Idea Ltd) continued market share loss may lead to a need for multiple tariff hikes over the next few years," Jefferies said in a note on Friday.

It projects a 10% tariff hike each in the second quarters of fiscal 2026 and 2027 and thereby expects Bharti Airtel to deliver 17% and 19% compounded annual growth in India revenues and operating profit (Ebitda) over the next three years. Further, it expects Bharti Airtel deleveraging by $9.5 billion over the next two years and support stock returns.

Reliance Jio's growth target announced during its annual general meeting last month may require multiple tariff hikes and the telco's recent lead to raise prices indicate step in this direction, Jefferies said.

Moreover, while Vodafone Idea's recent capital raise may help to maintain its market share, recent data shows that its revenue market share has declined further in the first quarter to 15.5%.

By the time the Aditya Birla Group telco completes network investments, it may see further decline in market share and therefore require more tariff hikes to bridge the gap between cashflows and dues payable, Jefferies said.