On Monday, Nomura/Instinet expressed a positive outlook on the telecommunications industry in India, specifically raising the price target for Bharti Airtel Ltd (BHARTI:IN) shares to INR1,650, up from the previous target of INR1,550. This adjustment comes alongside the firm's sustained Buy rating on the stock.
The upgrade is predicated on the belief that the Indian telecom sector, which has consolidated into a market with three major private players, is on a trajectory towards significant value creation and investment monetization. Nomura/Instinet anticipates continued tariff hikes in the upcoming years, which is expected to bolster the industry's revenue and earnings.
Bharti Airtel's management has signaled an anticipated average revenue per user (ARPU) of INR300 by the fiscal year 2026. To achieve this target, the company may need to implement a tariff increase of approximately 20% in the fiscal year 2026. Such a strategic move is seen as a necessary step to enhance the company's earnings and to further strengthen the overall health of the industry.
The prospect of tariff adjustments is viewed as an emerging trend in the industry, with the firm suggesting that these changes are on the near horizon. This anticipated shift is likely to contribute to robust earnings growth for the sector, as it adapts to a more sustainable economic model.
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