Bharti Airtel share price jumps 5%, dodges bears after tariff revision; stock may rise further

On the technical side, analysts at ICICI Direct have a ‘buy’ call on Bharti Airtel.

Bharti Airtel share price rose more than 5% on Wednesday while overall market sentiment was negative and bears were wreaking havoc. The telecom giant’s stock was trading at Rs 567 per share. “Bharti Airtel is getting positive momentum in stock due to the increase in tariff rates for the postpaid subscriber,” Amarjeet S Maurya, A.V.P. Research, Angel Broking said. Earlier in the day, Airtel announced that it will be discontinuing its Rs 49 entry-level prepaid recharge plan. Bharti Airtel share price has jumped 7.75% in the last one week of trade. 

ARPU increase on cards?

The company had also announced new plans for postpaid corporate and retail customers last week as the telecom industry continues to inch closer towards another tariff hike. “Airtel has recently upgraded its postpaid and prepaid plans. With this the market is anticipating an increase in Average Revenue Per User (ARPU) of Bharti Airtel going forward,” Vishal Wagh, Head of Research, Bonanza Portfolio told Financial Express Online. Vishal Wagh added that Bharti Airtel has also been gaining momentum when it comes to active wireless subscribers.  As per TRAI data, as of April, Bharti Airtel had 346.95 million active wireless subscribers, followed by Reliance Jio’s 335.17 million users. Vishal Wagh said that this is helping investors gain confidence in Bharti Airtel.

Although the exact impact of the changes made by Bharti Airtel so far is unknown, analysts expect healthy growth. “The company is increasing tariffs rate for the enterprise segment (which account for around 60% of the company’s postpaid users) which would boost overall average ARPU for Bharti Airtel. Going forward, we expect Airtel to report healthy top-line & Bottom-line growth on the back of a strong brand, growth in customer additions, and improvement in ARPU. Hence, we are positive on the stock,” Amarjeet S Maurya added.

Charts suggest further upside

On the technical side, analysts at ICICI Direct have a ‘buy’ call on Bharti Airtel. “We believe the stock has undergone healthy consolidation setting the stage to resolve higher towards Rs 595 levels in coming months as it is the 80% retracement of February-March 2021 decline (Rs  623-500),” they said in a note earlier. “The stock has formed a higher base above 52 weeks EMA and currently resolving out of past two months range (550-520) coincided with five months falling trend line, indicating resumption of the primary uptrend that augurs well for next leg of the up move,” ICICI Direct added. The brokerage firm has a stop-loss of Rs 510 on Bharti Airtel and recommends this trade with a 3-month time frame. 

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