Vodafone Idea, Bharti Hexacom, Airtel, Indus Towers: What Macquarie says

Foreign brokerage Macquarie has reportedly initiated coverage on Bharti Hexacom Ltd with an 'Outperform' rating while it initiated an 'Underperform' on Vodafone Idea Ltd. The foreign brokerage, as per a report, upgraded Bharti Airtel Ltd to 'Outperform' and maintained its 'Underperform' rating on Indus Towers Ltd. 

Macquarie suggested a target price of Rs 1,480 on Bharti Hexacom. Macquarie said Bharti Hexacom's growth and return metrics may tread similar to that of Airtel's India mobile operations. 

On Bharti Airtel, Macquarie reaffirmed its constructive earnings and deleveraging thesis and sees the return on invested capital (ROIC) for Airtel to improve to 18-20 per cent from 10 per cent by FY28, ET NOW reported. The brokerage suggested a revised target f Rs 1,630 for Bharti Airtel against Rs 1,280 earlier, ET NOW reported. 

Macquarie expects a lacklustre revenue and earnings per share growth for Indus Towers. It sees the sales and EPS growing 5 per cent each compounded annually over FY24-27. For Indus Towers, it suggested a target price of Rs 310 against Rs 280 earlier. 

While a couple of brokerages stayed neutral on Vodafone Idea, Macquarie said fundamental challenges remain, as it sees continued market share erosion and meaningful equity dilution risk. This brokerage suggested a target of Rs 10 per cent. 

Nomura India had earlier suggested a 'Neutral' rating on the VIL stock with a target price of Rs 15. It said the outlook for VIL remains constructive due to likely improvement in operating metrics underpinned by its ongoing network investments and 5G rollout and all three private players aligned on the need for further significant ARPU repair.

"If VIL is able to materially arrest the decline in its subscriber base in the coming quarters and revert to growth, it will materially further improve the outlook for the stock and drive earnings upgrades," Nomura India said.

JM Financial said VIL's long-term sustainability continues to be contingent on significant favourable government support. In its bull case scenario, it said VIL's fair value could jump to Rs 20 per share assuming a sharper tariff hikes driving ARPU to Rs 200 by FY26 and Rs 300 by FY30. This is against Rs 195 base case ARPU estimate for FY26 and Rs 265 for FY30.