5 reasons why the Bharti Airtel stock has outperformed the markets

5 reasons why the Bharti Airtel stock has outperformed the markets
Shares in Bharti Airtel rose 2.3 per cent, heading for their fifth consecutive session of gains, on a day when chary investors stayed put on the sidelines waiting for cues as the political situation unfolds starting with the winter session of Parliament from 22 November.

Five reasons the stock has done well

  1. Credit Suisse upgraded the Bharti Airtel stock to ‘outperform’ from ‘underweight’, and increased the target price to Rs 335 from Rs 225 on Monday, citing greater clarity on the regulatory front and reduced competitiveness in the telecom sector.

  2. The investment bank added that telecom service operators could also be testing markets for tariff hikes by reducing discounts.

  3. The Credit Suisse upgrade follows a thumbs-up from global investment bank Goldman Sachs, which on Friday also upgraded the Bharti Airtel stock to 'buy' from 'neutral', also citing reduced regulatory risk and potential for tariff hikes. Last week, Bank of America Merrill Lynch also upgraded the stock to ‘buy’. “In the medium term, two policy changes look likely: (1) reserve prices for the four not-bid circles could be lowered—Bharti is the market leader in most of these circles; (2) benchmarking of future auctions (eg. 900MHz) to the recent one will likely be careful; this may lower re-farming outgo, though higher 1,800MHz availability makes re-farming likely," BofA-ML said in a note.

  4. The poor response to the 2G auction on November 12 and 14 was a shot in the arm for telecom stocks because fewer players mean less competition and more price stability.

  5. UBS Securities’ Suresh Mahadevan said Bharti Airtel stood to gain most from the current environment in the telecom sector and its Q2 earnings were in line with expectations.

With inputs from Reuters