Bharti must win the upcoming 3G Auction. It must be the top winner and company has the resources to make it happen. This is critical to launch the full arsenal of high value services. Many investors are losing faith in Bharti and Reliance Communications, but we differ. There’s no way India can grow without these two companies as the communication pillars. Once the “sector re-rating” dust settles, we will see both these companies have brought in new revenue streams to support the EPS.
Bharti’s customer base is a huge asset; there’s big money in it. Its true people won’t pay a lot more for the same call, but they will pay more for value added services. Its happening all over the world. The current prices of Rs 285 per share is an attractive prices and one can buy on every fall.
Can it go down to Rs 250? Looks unlikely, but possible. It will become a stronger buy then. With the current share price (and any further lower) we are bullish on Bharti over a 2 year period. We believe we will look back in 2012 and wonder how Bharti was available at Rs 275-285 in Nov’2009.