Hari Viswanath

Investors with a long-term perspective can buy the shares of Bharti Airtel. As India’s only surviving private telecom player over the last two decades, it has proved its resilience and emerged stronger versus peers who either went bankrupt, or sold out, or merged due to several reasons, including Jio’s entry and aggressive pricing.

The company has shown good improvement on key metrics in recent quarters. With improving EBITDA, the company’s leverage profile has also become comfortable with net debt/FY22 EBITDA (Bloomberg consensus) at 2.7 times. The company also does not expect capex intensity to change in future even when 5G investments gain traction, as it will get offset by reduced investments in 4G.

Airtel now trades at an EV/EBITDA (FY22 Bloomberg consensus) of 8 times. This is around 10 per cent cheaper than its 3-year average of around 8.75 times and 10 per cent more than its 10-year average of around 7.25 times.

There is a case for a premium vs 10-year historical valuations given earnings are likely to accelerate over next few years, and the company is well positioned to capitalise on accelerating digitisation trends given its dominant position in the Indian telecom landscape alongside Jio.

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