Bharti Airtel Outperformer – Macquaire

In a research note released to high net worth clients, Macquaire has rated Bharti Airtel as an Outperformer with a 12 month Price Target of Rs 1050, 25% potential upside from current levels. Bharti Airtel is expected to report an EPS of Rs 37 for FY08 and Rs 50 for FY09.

Bharti Airtel reported a fantastic Q4 and highest ever EBITDA margin of 41.6%, an
expansion of 80bp QoQ and 410bp YoY. Bharti’s performance in 4Q and FY3/07 was impressive despite subscriber deactivation of 300k in 4Q and the hit from the phase out of roaming rentals and sharp cuts in roaming tariffs that took effect from 15 February 2007. Bharti’s ROE was 37.4% in FY3/07 and free cashflow break-even was achieved in 4Q FY3/07, well before the consensus estimate.

On DCF Methodology, Macquaire sets a price target of Rs 1050 and Bharti Airtel is their top telecom pick in Asia.