Stock Recommendation:: Bharti Airtel

STOCK UPDATE

Trade Recommendation:: Bharti Airtel
Trade Recommendation: Buy
Price target: Rs 1,100
Current market trading price: Rs 799

Q4 earnings to be flat sequentially

Key points

• The Finance Ministry has suggested additional charges for spectrum usage for new and existing operators. In our opinion this move is a regressive step and indicates inconsistency in the regulatory environment. Though there is limited scope of implementing such stiff terms, we view the development as sentimentally negative for telecom services stocks.
  
• In Q4FY2008, we expect a flat sequential growth in the earnings of Bharti Airtel due to tariff revision in the pre-paid segment and higher net interest cost. A key data point to watch out during the quarter would be the expansion in minutes of usage, as a result of the reduction in prepaid call rates.
• We maintain Buy call on the stock with price target of Rs1,100.

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Banking earnings preview

The earnings of banking companies are much awaited in the forthcoming earnings season owing to the various concerns that have emerged since the end of Q3FY2008. We present our analysis on the macro variables and earnings estimates for the banks under our coverage.