Goldman Sachs revises telecom outlook, sees growth for Bharti Airtel
Goldman Sachs revises telecom outlook, sees growth for Bharti Airtel
Goldman Sachs has raised its target price for Bharti Airtel to Rs 1,780, citing stronger-than-expected revenue growth, while maintaining a “sell” rating on Vodafone Idea and Indus Towers due to ongoing financial and operational concerns.
The brokerage’s revised outlook on Bharti Airtel is driven by higher broadband subscriber growth, improved wireless margins, and the integration of Indus Towers into its financials. As a result, it has increased its FY25-28 revenue and EBITDA estimates by 8% and 5%, respectively. Bharti Airtel’s stock, which climbed 1.8% to Rs 1,630 in Tuesday’s session, now holds a potential 9.2% upside based on Goldman Sachs' revised target.
Additionally, the brokerage noted Airtel’s disciplined capital expenditure strategy and focus on high-margin services, which have contributed to its positive earnings outlook.
Bearish Outlook on Vodafone Idea & Indus Towers
Vodafone Idea continues to face significant financial challenges, leading Goldman Sachs to retain its “sell” rating with a target price of Rs 2.40. This suggests a potential downside of nearly 70% from its current price of Rs 8.04, despite a 1.5% uptick on Tuesday.
The brokerage lowered Vodafone Idea’s FY25-28 revenue and EBITDA projections by up to 3% and 11%, respectively, citing weaker subscriber additions and sluggish tariff growth. Additionally, capex estimates for FY25-26 were raised by 10%, reflecting the company’s struggle to sustain its network amid tight cash flows.
Goldman Sachs cautioned that Vodafone Idea’s future remains uncertain, dependent on potential capital infusions, asset sales, or regulatory support.
Meanwhile, Indus Towers also saw a downward revision, with its target price cut by 6% to Rs 330 while maintaining a “sell” rating. Although the stock rose 2% to Rs 336.75 on Tuesday, the brokerage’s revised target suggests a modest downside risk of 2%.
Despite a 2% increase in FY25-28 EBITDA estimates due to higher tenancy demand from Airtel and Vodafone Idea, concerns over rising capital expenditures and potential cash flow constraints remain. Any improvement in Vodafone Idea’s financial health or an accelerated 5G rollout by Reliance Jio could act as potential upside triggers for Indus Towers.
Goldman Sachs’ latest update underscores the contrasting trajectories of India’s top telecom players, with Bharti Airtel continuing to strengthen, while Vodafone Idea and Indus Towers face financial pressures.
