Lokapriya on why it is time to buy Bharti Airtel

In the Indian perspective, all the exporters -- be it chemicals, textiles, IT and pharma will continue to benefit from exporting to the US and the developed world, says Chakri Lokapriya, CIO & MD, TCG AMC. Where do you think Bharti Airtel is headed and what do you make of the commentary now for Bharti?Bharti is clearly doing the right things at this point. The rights issue as Mr Mittal pointed out, followed the footsteps of what Reliance did with its right issue very successfully, very prudently in terms of having a time flow for the monies to come into the company. So the company is coming in tranches, the initial tranche will be at like a 10% discount and that it gives more than sufficient reason to invest into the stock price now. Second, I recently met with one of the largest global tech CEOs. The growth runway that is going to come in the next two or three years is quite mind boggling. 5G rollout is a very key point of that as enterprises move to the Cloud, companies increase their adoption from private to public Cloud and the underlying backbone for all that is a telecom network. So, it turns out to be a two horse race. If Vodafone pulls out of the race in a meaningful way, Bharti should then have the capital to acquire customers and roll out its network. So raising capital is a good idea. Telecom tariffs in India are the cheapest in the world. So, it is time for ARPUs to move up and those will trend up. Thirdly, technology rollout itself with digital adoption will take Bharti stock higher. It is a good stock to buy from a positional perspective right now. After the Jackson Hole Symposium, we are seeing the rupee strengthening versus the dollar. If that theme continues to pan out, won’t market participants have to reconsider export oriented stocks, the defensives -- IT and pharma or it is not at risk at all?There is no risk at all. USA in a sense said inflation target is going to be 2% and the target unemployment rate is 5% historically. They do not want the unemployment rate to go below that because it creates inflation. In the Indian perspective, all the exporters -- be it chemicals, textiles, IT and pharma will continue to benefit from exporting to the US and the developed world. Yes they can pause given that we had a good rally in IT in the last week but there is huge IT demand and also demand across the board. So, chemical companies will also gain. I would not really say that IT and pharma will not benefit, they will benefit but some of the chemical stocks like Deepak Nitrite, SRF, which corrected last week will again rebound because the fundamentals are intact.

from Economic Times https://ift.tt/3yqIs4d