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Airtel has a strong balance sheet: Goldman Sachs
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SME Times News Bureau | 22 Aug, 2019
Bharti Airtel, is staying strong and growing and has a robust balance sheet, said broking house Goldman Sachs.
Airtel
has a robust balance sheet, and a "best-in-class" spectrum footprint
position which favours Bharti Airtel for future network roll-outs and
market share gains. With declining capex intensity and rising margins on
stable revenue growth, we expect Bharti to be FCF (Free Cash Flow)
positive in financial year 2020-21, Goldman Sachs said in a report.
The report said the telecom operator has a strong wireless business growth potential.
"We
forecast a 30 per cent EBITDA growth CAGR for India wireless (46 per
cent of FY19E revenue) in FY19-22E driven by market share gains,
customer upgrades/better customer monetization in data, and tariff
hikes. With a recovery in India wireless, steady growth in Africa, and
stable non-wireless businesses, we forecast Bharti to deliver an 8 to 18
per cent revenue/EBITDA CAGR in FY19-22E", it said.
The broking
house also said the telco has solid growth outlook for Africa. "We
forecast a 9 to 11 per cent revenue/EBITDA CAGR in FY19-22E for Bharti's
Africa business (24 per cent of FY19E revenue) driven by data and
mobile money."
"Its valuation is at t 8.5x CY20E EV/EBITDA,
Bharti trades higher than its own historical average (of 7.3x) and its
Asian telco peer median (of 7.1x). However, we expect Bharti's EBITDA
growth over the next two-to-three years to be more than 3x its Asian
telco peers and view a higher multiple as justified; Bharti trades in
line with Asian peers on CY21 EV/EBITDA.
"Our 12-month
Discounted Cash Flow-based Trading Price of Rs 415 implies 15 per cent
upside; our bull/bear scenarios suggest 40 per cent upside vs. 13 per
cent downside."
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