Stock Tips: Brokerage firm CLSA has selected specific stocks from the telecom sector for this year 2022, which can give excellent returns of up to 37 percent to investors. CLSA has placed Bharti Airtel, Indus Towers and Sterlite Technologies in the top stock picks for this year. At the same time, the brokerage firm has also increased the target prices of Bharti Airtel, Vodafone Idea and Indus Towers as they see the possibility of faster growth this year.
According to CLSA, the Indian telecom sector can grow rapidly this year. The telecom sector is looking strong due to rising Average Revenue Per User (ARPU), growing market of 4G and prospects of launching 5G.
Bharti Airtel – Buy
Last year, the market had gained 12 per cent while Bharti Airtel’s shares rose 35 per cent. According to analysts at CLSA, Bharti Airtel has a strong balance sheet, positive free cash flow. In such a situation, the brokerage firm has fixed a target price of Rs 910 per share for investing in it, which is 28 percent more than the current price.
Indus Towers – Buy
The stock could not outperform last year and had gained only 3 per cent. Its shares could not perform much better due to the nearly 70 per cent stake in telcos and Vodafone Idea’s delay in raising funds. However, now the brokerage firm has given it a buy rating in view of the potential for growth in the long term and has fixed its target price at Rs 360 i.e. 37 percent more than the current price.
Sterlite Technologies – Buy
Sterlite Technologies had a stellar performance last year and gained 47 per cent. According to CLSA, after Corona, the company has benefited a lot due to the expansion of digital network across the world. The company’s net debt grew 30 per cent year-on-year to Rs 2,800 crore, but the company’s management says that debt has reached a high level and will now be brought down to 0.5 times the current 1.3 times debt against equity. Despite these management efforts, the brokerage firm has cut its target price to Rs 363 per share but it is 31 per cent higher than the current price.
Vodafone Idea – Underperform
CLSA has rated Vodafone Idea underperform. The brokerage firm believes that any financial crisis due to AGR dues has been postponed for the time being. Due to this, CLSA has set a target price of Rs 16 for this stock, which is only slightly higher than the current price.
They will have an impact on the telecom sector this year.
- Last year in November 2021, telecom companies had announced a 20-25 percent increase in tariffs, which has increased their revenue. Last year the revenue of the telecom sector on an annual basis due to the increase in tariffs and the government’s relief package on AGR
- But increased by 15 percent.
- Apart from this, the 4G network is expanding rapidly. CLSA believes that by the end of the next financial year 2023-24, the number of telecom data subscribers can increase to 921 million, of which 83 percent will be part of 4G network. In the next financial year, the revenue of telecom companies can grow at a CAGR of 13 percent.
- This year, the business of telecom companies will also be affected by the possibility of 5G spectrum coming this year and the reduction in AGR dues. Telecom companies have filed a review petition in the court regarding the arrears of AGR and if the verdict comes in their favor, then Bharti Airtel will save $ 420 million (Rs 31.22 thousand crore) and Vodafone Idea $ 500 million (Rs 37.17 thousand crore).
- Reliance Jio’s IPO is likely to come this year.