According to HSBC, Bharti Airtel’s dividend is expected to quadruple within the next three years
Bharti Airtel is expected to significantly increase its dividend payout by fiscal 2027, reaching Rs 34 per share, according to brokerage firm HSBC. This projection far surpasses market consensus estimates for the years FY25-FY27 by 28%–45%. HSBC attributes this growth to Bharti Airtel’s strong financial performance, improved free cash flow, and decreasing leverage in its India operations.
For fiscal 2025, HSBC anticipates a substantial 114% year-on-year increase in dividends to Rs 17 per share, up from the current Rs 8 per share. Bharti Telecom Ltd (BTL), the company’s promoter entity, is expected to utilize these higher dividends to address its mounting debt obligations following its recent stake increase in Airtel.
HSBC underscores Bharti Airtel’s structural growth, driven by its expanding market share in mobile services and robust broadband expansion. The brokerage maintains a “buy” recommendation for the stock, setting a target price of Rs 1,940, indicating a potential 22% upside from its current trading levels.
Three key drivers behind Bharti Airtel’s growth trajectory were highlighted by HSBC. Firstly, an increase in mobile average revenue per user (ARPU) is expected, supported by tariff hikes, increased data consumption, and a shift to premium postpaid plans. The company’s ARPU is forecasted to reach Rs 301 by FY27.
Additionally, the rapid expansion of Airtel’s home broadband segment is a significant factor propelling the company’s growth. The broadband segment is projected to grow with a revenue compound annual growth rate (CAGR) of 24% over FY24-FY27, with subscriber growth expected to double to 15.9 million in the same period.
In addition to this, the brokerage stated that as the company finishes its 5G rollout and expands into rural areas, the intensity of capital expenditure is projected to decrease. This will enhance Bharti Airtel’s free cash flow even further. In fact, Bharti Airtel reported over Rs 39,000 crore in free cash flow for FY24, highlighting its robust financial position.
On Wednesday, Bharti Airtel shares were trading slightly lower at Rs 1589.50 on the BSE. Despite this, the stock has surged by 51% over the past year.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.