Analysts at Morgan Stanley said the estimate validity extension can impact Airtel India wireless revenue by 0.6-0.7 per cent while India wireless earnings before interest, tax, depreciation, and amortization (EBITDA) can go down by 2.7-3 per cent. Despite this, the brokerage house remains 'Overweight' on the stock with the target of Rs 575 per share.
Brokerage firm Motilal Oswal Securities has a 'Buy' rating on the stock and it sees an even higher upside, with the target of Rs 620.
In a note dated March 31, 2020, the brokerage firm said, "We see limited impact of COVID-19, currency and crude price swings on the BHARTI stock and believe that it is the best hedged to face regulatory woes."
"Given the complete lockdown in India due to Covid-19, net subscriber adds (average 2-3 months) have stalled thus impacted by 1-2 per cent. With physical recharges being unavailable, there has been a shift to digital recharges (from 15 per cent in the last 1-2 years to 35-40 per cent currently). In the current environment, more tech-savvy data subscribers with higher average revenue per user (ARPUs) and longer-term recharges of 90 days may see lower impact," the brokerage firm said.
About the free incoming calls scheme, the report said, "This could impact 1QFY21 revenue/EBITDA by Rs 2.2 billion/ Rs1.8 billion i.e. equivalent to meager 1-2 per cent. Against this, increased data consumption should see upgrades in recharge values, thus, mitigating the impact. In 4QFY20/1QFY21, we currently estimate 13 per cent/19 per cent revenue growth on QoQ basis," it said.
Overall, "BHARTI has EBITDA growth opportunity either through additional ARPU hike (function of Vodafone Idea survival) or market share gains in case VIL shuts down. In the more likely scenario of VIL’s survival, BHARTI has opportunity to reach Rs 621 billion EBITDA in FY22 that could generate post interest FCF (free cash flow) yield of 11 per cent" the report said.