Buy Bharti Airtel, target Rs 392: Edelweiss Financial Services

Edelweiss Financial Services has a buy call on Bharti Airtel with a target price of Rs 392.

The current market price of Bharti Airtel is Rs 331.75.

Time period given by the brokerage is one year when Bharti Airtel price can reach the defined target.

View of the brokerage on the company:
Focus on customer experience to win 4G battle: Bharti is focusing on network experience and customer service in order to create traction. The company has purchased sufficient spectrum (28.4 per cent share of the overall liberalised spectrum) and has installed over 200k base stations along with extensive fibre rollout. Consequently, its data capacity utilisation is significantly below 50 per cent. The company has also taken various digital initiatives to address customer concerns, which have reduced customer care calls per customer by 75 per cent over the past two years.

Content play: Onboarding partners: The objectives of Bharti's content play are to create customer stickiness, lift ARPU and build new revenue streams such as advertising. Besides, the company is partnering multiple platforms to improve customer experience. Although Bharti has created a strong platform, forging engagement leadership is crucial to winning platform wars.

Outlook and valuation: Poised for recovery; maintain ’BUY’: Although the company’s investments in the network are improving customer experience, translating this into a higher share of 4G net-adds and usage parameters is crucial for maintaining revenue market share. The stock is trading at 7.7x FY20E EV/EBITDA. We maintain ‘BUY/SO’ with a DCF-based target price of Rs 392.