Telecom Sector Check - Tariff Hikes – Much-Awaited And Positive; Seems Priced In: Dolat Capital

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Dolat Capital Report.Contrary to the past two tariff increases, Reliance Jio has taken a lead this time by announcing ~17-25% (average ~20%) in tariff hikes across popular plans, in-line with expectation. Two other positives are-tariff increases in the postpaid segment too, along with prepaid,Plan for 5G monetization viz. unlimited 5G data will be available on all 2GB/day and above plans i.e. restricting it in widely popular 1.5GB/day plans. We expect Bharti Airtel Ltd./Vodafone Idea Ltd. to follow with similar hikes except in the 2G segment (~25/30% of customers respectively). The tariff increase is a significant positive and had been key re-rating trigger in recent past driving sharp stock price performance of telcos versus Nifty. In the absence of a near-term catalyst, the positive news looks priced-in especially for Bharti Airtel..The bigger question is shall the sector multiple get re-rated higher (say 12 times enterprise value/Ebitda to 15 times for Bharti Airtel) in the medium-term due to strong earnings visibility and deleveraging, seems, but from a longer-term perspective no. Yet we are keeping our multiple unchanged due to lack of catalyst in the near-term. Price increase shall lead to a modest change in estimates for Jio/Bharti. We rollforward our target price from FY26 to H1 FY27E. Our revised target price for Bharti Airtel is Rs 1,440 from Rs 1,225 (+18%) at 12 times EV/E for India Wireless and for Jio (per share of Reliance Industries) is Rs 1,450 from Rs 1,365 @ 11 times EV/E. Reiterate Reduce on Bharti Airtel..Click on the attachment to read the full report:.Reliance Industries - RJio Initiates ~20% Tariff Hike; Boost To The Telecom Sector: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Telecom Sector Check - Tariff Hikes – Much-Awaited And Positive; Seems Priced In: Dolat Capital

What further positive catalysts can lead to re-rating, if any, in the near term?

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Telecom Sector Check - Tariff Hikes – Much-Awaited And Positive; Seems Priced In: Dolat Capital

What further positive catalysts can lead to re-rating, if any, in the near term?

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