Bharti Airtel ROIC > WACC After Eight Years In FY25E, Can It Be A Rerating Catalyst? ICICI Securities

We see two big rerating catalysts for India telcos, particular for Bharti Airtel Ltd.

  1. sharp jump in Bharti India’s free cash flow generation, which will help deleverage its balance sheet and allow equity value to grow faster and

  2. post-tax return on invested capital jump, above weighted average cost of capital in FY25E, after a hiatus of eight years, enabling business to generate economic value.

Bharti India is expected to outperform its peers on many key parameters, including Ebitda, Ebit, FCF generation and posttax ROIC. Bharti Airtel has grabbed higher incremental market share in India mobile business, which we believe could sustain for a few more quarters, as Bharti India expands its rural presence.

We continue to prefer Bharti Airtel despite the recent jump in its stock price as Bharti’s earnings have more tailwinds and valuations still do not appear very stretched.

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