Bharti Airtel share buyback soon? How Sunil Bharti Mittal's telecom giant is rewarding investors

Bharti Airtel Ltd, which enjoys a consensus 'Buy' rating, has rewarded investors handsomely, delivering 209 per cent returns in the past five years against a 39.80 per cent return for the benchmark Nifty during the same period. Going by founder and Chairman Sunil Bharti Mittal's latest remarks, the country's third-most valued listed company could be in a position to initiate share buybacks by 2029. The telecom major is already a consistent dividend payer, with its dividend yield rising from 0.4 per cent in FY21 to 1.35 per cent in FY26, data compiled from corporate database AceEquity suggests.

In an interview with Mint, Mittal said Airtel's balance sheet has never been stronger, adding that the telecom giant would be debt-free by 2029.

"And if you’re generating $14–15 billion Ebitda, your capacity to borrow is huge. So I don’t see us doing any more rights or fresh issues and all that. The company would be in a position to start buybacks," Mittal told Mint.

Rs 3 lakh crore sales by FY28

Mittal's optimism is also reflected in Street estimates. Bloomberg consensus estimates peg Airtel to report 42.83 per cent growth in consolidated net profit at Rs 38,130 crore in FY27, alongside a 20.96 per cent year-on-year (YoY) rise in net sales at Rs 82,369 crore.

A median estimate of 31 analysts sees Airtel's net profit exceeding Rs 50,000 crore by FY28 and its revenue crossing Rs 3 lakh crore (28 anlaysts) by FY29. Brokerages including Citi, Jefferies, Morgan Stanley and Nomura have 'Buy' or 'Overweight' ratings on Bharti Airtel shares, with the consensus 12-month target price of Rs 2,374 implying 12 per cent upside. This comes on top of the 17 per cent returns Bharti Airtel shares have delivered in the past one month amid Jio's blockbuster listing on October 28.

Earlier, in June this year, while upgrading Bharti's long-term issuer rating to BBB+, S&P forecast total cash dividends by the company to rise to about Rs 23,000 crore in FY27 and Rs 35,000 crore in FY28. This follows annual increases of 65-75 per cent in the past two fiscal years from a low base. Expanding earnings and higher operating cash flows can help offset rising capital expenditure (capex) and dividends, S&P noted on June 24.

Bharti Airtel up 636% since Jio launch

Mittal's fresh comments come at a time when the price war in the telecom sector has eased and expectations of further tariff hikes have risen for the coming months. Since the September 5, 2016 launch of industry disruptor Jio, Bharti Airtel shares have delivered 636 per cent returns, making the stock one of the top 10 Nifty gainers over the period.

Recalling Jio's entry, Mittal told Mint that the company came with free services for a year, leaving Airtel with "nothing to respond to". He added that his telecom operator managed to navigate that period with great difficulty. "You saw the stock price went to Rs 220; things were quite shaky in 2017-18, but somehow we knew the playbook, we knew exactly how long this would last, and you just had to hold on," he said.

S&P's June note pointed out that Airtel's incentive to continue reducing debt is likely to diminish over time, given that its leverage will soon be lower than the Asia-Pacific telecom median.

"If so, the company could undertake other capital allocation decisions, such as acquisitions and higher shareholder returns," it said.