Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, on Tuesday said that the 5G rollout and data businesses have been picking up nicely in the telecom sector. From the select space, the market expert liked Bharti Airtel Ltd as his top pick.
"Airtel is closer to its ARPU (average revenue per user per month) target of Rs 300. Even Jio is following that and eventually, ARPUs will increase for all these companies. Going forward, valuations may look rich but Airtel will be a preferred pick. That said, Reliance Industries Ltd (RIL) after a recent correction becomes attractive at current levels, both for the Jio Digital play and other businesses as well. I think these are the two companies which one should be looking for," Kant told Business Today. Airtel shares were trading 0.27 per cent higher at Rs 1,583.75 while RIL's stock shed 0.02 per cent to trade at Rs 1,287.50.
When asked about Vodafone Idea Ltd (VIL), the market specialist said, "For VIL, there are many things which are subject to government discretion and judgements that may come along. But, I think this company is going to stay and if you have a long-term horizon of 2-3 years, then things may turn out in its favour. The government is holding more than 30 per cent of the equity stake here. So, it is a multibagger as per my viewpoint." VIL shares zoomed 14.90 per cent to hit a day high of Rs 8.02.
Today's sharp upmove in VIL shares came after the Union Cabinet approved a proposal to waive the bank guarantees (BG) that telecom operators were required to provide for spectrum purchases up to 2022. The telecom operator is seen gaining the most as it owed over Rs 24,700 crore to the government, which was to be submitted from September 2024 to February 2025.
Meanwhile, Indian equity benchmarks were up today, led by gains in information technology and metal stocks. Broader indices (mid- and small-cap shares) were up as well.
Nine out of the 16 sector gauges -- compiled by the NSE -- were trading in the green. Sub-indexes Nifty IT and Nifty Metal were outperforming the NSE platform by rising as much as 1.05 per cent and 0.67 per cent, respectively. However, Nifty Pharma and Nifty Auto fell 0.42 per cent and 0.36 per cent, each.
The overall market breadth was strong as 2,199 shares were advancing while 871 were declining on BSE.