Stock Tips: After the decision to raise 21 thousand crores through rights issue, there has been a tremendous rise in the shares of Bharti Airtel. Today, its shares closed at Rs 625.00 with a rise of 5.02 per cent on the NSE in intraday. According to the announcement made by the giant telecom company, the rights issue will be in the ratio of 1:14 at a price of Rs 535 per share, that is, shareholders will get one share for every 14 shares at a price of Rs 535.
After this there will be a dilution of 7 percent equity i.e. the number of traded shares available in the market will be less. The price at which the rights issue is to take place is around 14 per cent discount from the current level (Rs 625 on NSE). The promoters and promoter group shall subscribe to the shares under the rights issue and shall also take the shares which remain unsubscribed.
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This is the expert’s opinion for the investor
- According to analysts at Motilal Oswal Financial Services, the decision to actively raise capital ensures that the company can better fund its competition from Reliance Jio in the event of 5G technology upgrades and market consolidation. Analysts have given it a buy rating and the target price has been kept at Rs 720 i.e. a target of 21 percent profit.
- According to analysts at Emkay Global Financial Services, Vodafone Idea’s weakening in the telecom sector, coupled with its increasing share in the country’s wireless business, has a better growth potential for the company. Apart from this, the trend of FIIs (Foreign Institutional Investors) is also looking positive. Giving buy rating to this stock, the brokerage firm has fixed the target price 23 percent higher i.e. Rs 730.
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- According to Pavitra Shetty, co-founder and trainer of Tips2Trades, the telecom market has become a duopoly, that is, only Jio and Airtel dominate. Apart from this, Airtel has the ability to survive despite competitive pricing. In such a situation, Shetty believes that investors should subscribe to the rights issue. Shetty has set a target price of Rs 730 with a strong support level at Rs 585 for this stock in the near term.
- According to Ashish Biswas, Head (Technical Research), CapitalVia Global Research, the company’s capital raising plan could have a negative impact in the short term as it is expected due to stable position of leverage and liquidity. However, it has been able to compete with Jio strategically and has attracted more customers than its rivals. According to Biswas, Airtel can offer its customers attractive offers for faster internet through Xtreme Fiber and the company can perform better in the long term. Capitalvia Global Research advises to hold this stock for long term for gains.
(Article: Surbhi Jain)
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)