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Informist, Friday, Sep 13, 2024

MUMBAI - Shares of Bharti Airtel and Vodafone Idea are expected to remain in a range in the coming week, analysts said. While most parameters for Bharti Airtel appear fine, stretched valuations may weigh on the stock, leading to range-bound movement next week, a research analyst covering the sector said. Analysts are cautious about Vodafone Idea due to its weak fundamentals and the pending case on adjusted gross revenue-related dues.

The outlook for Bharti Airtel remains positive. In a report, brokerage house Jefferies raised the target price of the stock to 1,970 rupees from 1,760 rupees, while maintaining a 'buy' rating, due to expectations of multiple tariff hikes. "Jio's rising focus on growth may lead to the need for multiple tariff hikes over the next years," the brokerage said. The continued loss of market share of Vodafone Idea might also lead to the need for tariff hikes, it added. There were expectations of more than one tariff hike in 2024 at the start of the year. However, analysts do not expect another tariff hike before July 2025.

The brokerage sees a 10% tariff hike in the September quarters of both 2025-26 (Apr-Jun) and 2026-27. Consequently, Jefferies expects Bharti Airtel to deliver 17% and 19% compounded annual growth in revenues and earnings before interest, tax, depreciation, and amortisation over the coming three years. The brokerage also said Vodafone Idea's recent capital raising could help the company maintain its market share.

Shares of Bharti Airtel gained over 6% this week, while those of Vodafone Idea gained marginally. Today, shares of Bharti Airtel and Vodafone Idea closed 0.8% lower each at 1,634.45 rupees and 13.41 rupees, respectively, on the National Stock Exchange. Telecom stocks will also take cues from the market next week. All eyes will be on the US Federal Open Market Committee's interest rate decision on Sep 10, which will give direction to the market. The US Federal Reserve is widely expected to cut key interest rates at its meeting on Sep 17-18.

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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjali Singh
Edited by Avishek Dutta

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