Nomura has reiterated its 'Buy' rating on Bharti Airtel and raised its target price to Rs 2,355 from Rs 2,220, citing sustained ARPU growth, strong free cash flow generation and attractive valuations.
The brokerage expects Airtel to deliver 14% EBITDA CAGR and 14% operating free cash flow CAGR over FY26-FY29, supported by an expected tariff hike in the third quarter of FY27, operating leverage and continued premiumisation. It also forecasts around 9% ARPU CAGR for the India mobility business over the period.
"Bharti Airtel is one of India's premium telecom companies, and a structural beneficiary of a consolidated three-player market," Nomura said, adding that the completion of the 5G rollout should allow capital expenditure to moderate, supporting deleveraging through stronger cash flows.
Nomura believes Airtel's valuation remains compelling. It noted that Airtel's India telecom business trades at an implied 9.3x FY28 EV/EBITDA, below the roughly 12.2x implied multiple for Reliance Jio, despite Airtel generating higher ARPU, superior margins and stronger free cash flow. "A premium operator priced at a discount to its main rival, in our view, is unwarranted," the brokerage said.
The report added that Airtel deserves to trade at a premium to global telecom peers because of India's favourable market structure, a long runway for ARPU expansion and multiple growth opportunities. These include data centres, Airtel Money, lending, cloud services and a rising stake in Indus Towers, while 5G monetisation through fixed wireless access, private networks and network slicing remains at an early stage.
Nomura also expects the regulatory environment to remain supportive of India's three-player telecom market, with the possibility of further relief on licence fees or spectrum usage charges if needed to preserve industry stability.
The brokerage, however, flagged Airtel's 28% foreign institutional investor ownership as a key near-term risk, saying the stock could face outsized selling during periods of global risk aversion even if the company's fundamentals remain intact.