Bharti Airtel share price zoomed in trade today after its promoter Singapore Telecommunications last week said it would take part in the Rs 32,000-crore capital infusion plan by subscribing to the telco's Rs 25,000-crore rights issue. Singtel and Airtel's major shareholders - Bharti Group and Bharti Telecom - intend to subscribe to their full entitlement, except for a renunciation by Bharti Telecom in favour of GIC Singapore, Singtel said.
Bharti Airtel share price closed 8.08% or 25 points higher at 333.70 compared to the previous close of 308.75 on BSE today. On Nifty, Bharti Airtel share price rose 8.36% to 334.50.
Bharti Airtel share was the top gainer on Sensex and Nifty today. Bharti Airtel share price rose up to 9.02% to 336.60 level on BSE today.
Bharti Airtel share has lost 17% during the last one year and gained 6.65% since the beginning of this year. 19 of 25 brokerages rate the stock "buy" or 'outperform', four "hold" and two "underperform", according to analysts' recommendations tracked by ReutersPromoter Singapore Telecommunications (Singtel) will subscribe to 170 million shares in the Airtel's rights issue for a total consideration of Rs 3,750 crore, the Singapore-based company said.
Last week, Airtel's board had approved plans for a rights issue to raise up to Rs 25,000 crore through issuance of fully paid up shares at a price of Rs 220 per share and to raise an additional Rs 7,000 crore through Foreign Currency Perpetual Bond Issue.
With this, Singtel's effective interest in Airtel will be 35.2% and the company will continue to be the single largest shareholder in the country's second largest telecom company. S&P Global Ratings has said Bharti Airtel's proposed rights issue of up to Rs 25,000 crore is not enough to stabilise its credit rating.
The rating agency said there is a negative outlook, an indication of the rating downgrade, which looks at renewed competition and higher capital spending by the company that will keep its debt level up.
"S&P Global Ratings believes the proposed rights issue (of Rs 25,000 crore), if successful, would go a long way in restoring Bharti's balance sheet and shoring up leverage."
The net debt of Bharti Airtel at the end of the third quarter of 2018-19 stood at Rs 1. 06 lakh crore.
Another credit rating agency Moody's Investor Service has come out with different perspective on the proposed rights issue. Moody's said the Airtel's proposed rights issue is "credit positive" as it will enable the company to pare debt and improve liquidity.
Moody's statement said it still expects a significant portion of proceeds from the rights issue to be used to lower debt, strengthening Airtel's balance sheet and providing the company with greater financial and operational flexibility for its Indian operations.