Global brokerage firm Nomura has significantly upgraded its outlook for Bharti Airtel, reaffirming a 'Buy' rating and raising its price target to Rs 2,355 per share. This revised target suggests a substantial 28% upside potential from the stock's previous close.
Nomura's bullish stance is rooted in several key factors, projecting robust growth for the Indian telecom giant. The brokerage anticipates healthy free cash flow generation and increased shareholder payouts in the coming years. Furthermore, Nomura predicts Bharti Airtel's EBITDA and free cash flow to achieve a compounded annual growth rate (CAGR) of approximately 14% between fiscal years 2026 and 2029.
Driving Factors for Growth
The projected growth is expected to be fueled by an anticipated mobile tariff hike in the third quarter of FY27. This, combined with a continued shift towards premium subscribers and operational leverage as revenue growth surpasses cost increases, is set to bolster the company's financial performance. Stronger cash generation will enhance Bharti Airtel's financial flexibility, allowing for higher dividend distributions while simultaneously investing in future expansion opportunities.
Beyond Core Wireless Services
Beyond its conventional wireless operations, Nomura highlighted several emerging businesses poised to become significant long-term value drivers for Bharti Airtel. These include its expanding footprint in data centers, the financial services arm Airtel Money, digital lending initiatives, and cloud services. The brokerage also noted the potential for value creation from Bharti Airtel's increasing stake in Indus Towers, suggesting these diversified ventures are not yet fully reflected in the current market valuation.
Structural Strengths Justify Premium Valuation
Nomura asserts that Bharti Airtel merits a valuation premium compared to its global telecom counterparts, citing four distinct structural strengths of the Indian market and the company itself:
- A highly favorable and largely consolidated telecom market in India.
- Significant headroom for further growth in Average Revenue Per User (ARPU) through future tariff adjustments.
- Multiple avenues for growth extending beyond traditional connectivity services.
- A supportive regulatory environment conducive to sustaining a competitive three-player telecom market over the long term.
While Bharti Airtel's ARPU stood at Rs 257 in the March 2026 quarter, a slight dip from Rs 259 in the preceding quarter, Nomura expects future tariff revisions and an expanding premium customer base to drive substantial improvements over the medium term.
On the day of the announcement, Bharti Airtel's stock saw an initial rise of nearly 2%, reaching Rs 1876.90 against its previous close of Rs 1842.10. The stock later settled 0.96% higher at Rs 1859.85, with a market capitalization of Rs 11.33 lakh crore. Despite recent fluctuations, the brokerage's updated target signals strong confidence in the company's future trajectory.