Bharti Airtel shares downgraded by IIFL on competition concerns; check new target

Shares of Bharti Airtel will be in focus on Friday, May 15, after the stock received a brokerage downgrade. Bharti Airtel was also the most traded stock on the Nifty 500 index during Thursday's session.

IIFL Capital downgraded the stock to 'Add' from its earlier rating of 'Buy', citing rising competitive risks and slower gains in market share.

The brokerage has assigned a revised price target of ₹2,106 on the stock, implying a potential upside of around 12% from current levels.

According to IIFL, Bharti Airtel's mobile revenue market share gains in India are becoming incrementally tougher, as reflected in recent quarters.

The brokerage also said that a potential fund-raise by Vodafone Idea could intensify competition in the telecom sector, particularly through higher channel payouts and more aggressive market strategies.

Despite the downgrade, IIFL said promoter commitment towards the company remains reassuring, although some near-term challenges persist.

During the company's earnings call, Chairman Sunil Bharti Mittal stated that the current 3.6% shareholding gap between Singtel and the Mittal family could narrow over the next three to four years if Singapore Telecommunications reduces its stake in Airtel.

The brokerage said that Bharti Telecom Ltd. (BTL), the promoter entity jointly controlled by Singtel and the Mittal family, could eventually increase its stake in Airtel from the current 40.5% to over 50% through creeping acquisitions or by opting out of future buybacks.

IIFL also believes that if Vodafone Idea successfully raises capital, Airtel's incremental market share gains may face additional pressure.

The brokerage, however, remains positive on Airtel's cash flow generation.

Despite elevated capital expenditure and annual AGR and spectrum-related payouts of ₹9,000 crore and ₹8,400 crore respectively, IIFL expects cumulative free cash flow generation of ₹1.7 lakh crore during FY27 to FY29, compared to ₹48,000 crore in FY26 after AGR payouts.

The brokerage added that while Airtel continues to invest in areas such as data centres and NBFC operations, returns from these businesses may take longer to materialise.

IIFL's base-case assumptions also factor in another telecom tariff hike in September 2026, although it said this remains dependent on the evolving industry environment.

Bharti Airtel share price movement

The Bharti Airtel stock recorded its biggest single-day gain since August 2021 on Thursday and extended gains for a second consecutive session.

Trading volumes on Thursday were the highest in nearly two months, with around 2.1 crore shares changing hands, compared to the 20-day average volume of 93 lakh shares.

Delivery volumes also remained elevated, with delivery percentage staying above 60% in four of the last five sessions. Around 1.3 crore shares were marked for delivery on Thursday, higher than the 20-day average of 55 lakh shares.

Bharti Airtel shares ended 5.24% higher at ₹1,883 on Thursday. The stock is down 11% so far this year. Airtel shares are still down 14% from its 52-week high of ₹2,175.