Bharti Infratel hits over 3-month high; zooms 100% from March lows

The stock rallied 8% per cent to Rs 243 in the intra-day deals today, and was quoting at its highest level since February 14, 2020 on the BSE

Shares of Bharti Infratel hit an over three-month high of Rs 243, up 8 per cent, on the BSE on Friday in an otherwise weak market after media reports suggested that global technology giant Google is in talks to buy a 5 per cent stake in Vodafone Idea. The telecom service provider is among the key clients of Bharti Infratel.

The stock was trading at its highest level since February 14, 2020. With today’s rally, Bharti Infratel stock has zoomed 100 per cent from its 52-week low level of Rs 121 touched on March 19, 2020. In the past one month, it has soared 46 per cent as against a 2 per cent decline in the S&P BSE Sensex.

Bharti Infratel deploys, owns and manages telecom towers and communication structures for various mobile operators. The Company’s consolidated portfolio of over 95,000 telecom towers, which includes over 42,000 of its own towers and the balance from its 42 per cent equity interest in Indus Towers, makes it one of the largest tower infrastructure providers in the country with presence in all 22 telecom circles.

Bharti Infratel’s and Indus’ three largest customers are Bharti Airtel (together with Bharti Hexacom), Vodafone Idea and Reliance Jio Infocomm, which are leading wireless telecommunications service providers in India by revenue.

Last month, Bharti Infratel said that its board took note of the status of Scheme of arrangement between Indus and Bharti Infratel and has further extended the Long Stop Date till June 24, 2020, subject to agreement on closing adjustments and other conditions precedent for closing, with each party retaining the right to terminate and withdraw the scheme.

During the previous financial year 2019-20, both Bharti Infratel and Indus Towers witnessed an increase in gross additions both on towers and co-locations on a year-on-year basis. The management believes this is a harbinger of the future especially as witnessed in the current environment of the Covid-19 crisis, where the nation’s dependence on wireless networks has been further elevated.

Analysts at Edelweiss Securities expect tenancy cancellations to taper down over the next two quarters and a much-improved gross tenancy addition to start reflecting in net tenancy additions accordingly. The brokerage firm expects the government to step in and offer a staggered payment option, which would help sustain the current industry structure. However, the stock was trading above 12 month target price of Rs 235 per share.