Goldman upgrades Bharti to buy

November 24, 2010   ·   0 Comments

Goldman Sachs has upgraded Bharti Airtel to buy from neutral and raised its target price on the stock of India’s top mobile phone operator to Rs 430.

“We believe that Bharti is the best positioned operator to benefit from the improving regulatory environment and likely better competitive environment in India,” analysts at the US investment bank wrote in a note.

We believe the regulatory environment in the next 12-18 months will be more favorable to incumbents than new entrants,” they said.

Bharti acquired the African telecom assets of Kuwaiti group Zain in a USD 9 billion deal in June, giving it access to what it says is the “biggest future continent” for telecoms, and making it the world’s fifth-biggest mobile operator.

For this deal, the Indian telecom major had taken USD 7.5 billion from a consortium of 11 lenders. It is now being learnt that the company has charted out a plan to prepay this debt. The first tranche of USD 800 million is expected to be completed by March 2011, while the second tranche of USD 400 million may be rolled out by January 2012. However, sources say that further pre-payment depends on cashflows and Zain’s profitability.

Manik Jhangiani CFO of the  Bharti Group had earlier told “That is the beauty of how we structured the debt financing. We wanted to make sure we had the pre-payment flexibility because our India business is hugely free cashflow positive and generates a huge amount of free cashflow. We took USD 7.5 billion of debt for the acquisition and I could say we could be paying down anywhere between USD 0.5-1 billion.”

Verdict: We like this Stock & Its growth story which it has written in India & which it is going to write in Africa. We recommended this Stock to Buy @ 275 levels on the same Website. Still we ll continue to Hold this Stock.

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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