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Buy Bharti Airtel, target of Rs 781: Sharekhan

Posted on: May 4th, 2009 and is filed under Brokerage Recommendations.

Sharekhan has maintained its buy rating on Bharti Airtel with a price target of Rs 781 in its April 29, 2009 research report.

“Bharti Airtel’s Q4FY2009 performance was marginally below our expectations. The consolidated revenues grew by 2% quarter on quarter (qoq) and by 25.6% year on year (yoy) to Rs 9,824.5 crore during Q4FY2009. The revenues of the mobile business went up by 3.6% qoq while the non-mobile revenues registered a flat growth on a sequential basis. The profit before tax (PBT) increased 1.1% sequentially to Rs 2,490.6 crore. The net income increased by 3.7% sequentially due to a 227-basis-pont quarter-onquarter (q-o-q) decline in the effective income tax rate to 8.1% in Q4FY2009.”

“We have marginally lowered our FY2010 EPS by 1.1% to Rs 52 as we have lowered our APRU assumption as we anticipate price competition to intensify going forward. We are introducing FY2011 estimate and expect an EPS of Rs 58.5 for FY2011. At the current market price, the stock is trading at 14.4x its FY2010E earnings and 8x its EV/EBITDA. In line with the revision in the FY2010 EPS, we have revised our price target to Rs 781. We maintain our Buy recommendation on the stock,” says Sharekhan’s research report.

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