The company’s board has approved the right issue price at Rs 535 per fully paid-up share, including a premium of Rs 530
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Bharti Airtel share price added 2 percent in the early trade on August 30 after the company’s board gave the go-ahead to raise up to Rs 21,000 crore through a rights issue.
The board approved the issuance of equity shares of face value of Rs 5 each on rights basis to eligible shareholders as on the record date (to be notified later), of an issue size of up to Rs 21,000 crore,” the company said in its release.
The board approved the issue price at Rs 535 per fully paid-up share, including a premium of Rs 530.
“25% on application and balance in two more additional calls as may be decided by the board/ committee of the board from time to time based on the company’s requirements within an overall time-horizon of 36 months,” the firm said.
The rights issue ratio set at 1 share for every 14 shares held by shareholders as on the record date.
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The board also constituted a “special committee of directors” to decide the other terms and conditions of the issue including the issue period and the record date.
The promoter and promoter group will collectively subscribe to the full extent of their aggregate rights entitlement. In addition, they will also subscribe to any unsubscribed shares in the issue.
The company will on August 30 hold a call to interact with analysts, investors and market participants from 2.30- 3.30 pm, the company said in another release.
Company chairman Sunil Bharti Mittal along with senior members of the leadership team—Gopal Vittal, Managing Director & CEO (India and South Asia), Harjeet Kohli, Group Director-Strategy and Business Development, and Badal Bagri, Chief Financial Officer (India and South Asia), will take the call.
Here is what brokerages have to say about the stock and the company after the rights issue announcement:
Jefferies | Rating: Buy | Target: Rs 685
Jefferies has maintained a “buy” rating, as the market share gains are set to accelerate.
The company’s plan to raise Rs 21,000 crore via rights issue bodes well and allays concerns around promoters’ intent.
The issue, at 10 percent discount to current market price (CMP), rewards shareholders and it will be EPS accretive and may set Rs 535 as the floor price for the stock.
It is a reminder that standalone FCF generation is weak and the company may need capital for 5G auctions over the next three years.
CLSA | Rating: Buy | Target: Rs 780
Broking house CLSA has maintained its “buy” rating on the stock, given the company’s commendable market share performance.
The rights issue and call options create headroom, keeping gearing comfortable.
UBS | Rating: Buy | Target: Rs 655
UBS, too, has kept a “buy” rating on the stock as the rights issue to strengthen balance sheet for 5G investments, including spectrum auction.
The net debt-to-EBITDA is going to reduce further and UBS estimate the company’s FY22 net debt/EBITDA at 2.6x, reducing to 1.8x by FY24.
Motilal Oswal
The unexpected capital raise may cause a negative reaction in the short term but we see a good earnings growth opportunity over the next 12 months.
We value Bharti on an FY23E basis, assigning an EV/EBITDA of 11x to its India mobile business and 5x to its Africa business, arriving at a SoTP-based target price of Rs 720. Maintain Buy.
At 0925 hours, Bharti Airtel was quoting at Rs 600.55, up Rs 6.60, or 1.11 percent, on the BSE.
The share touched a 52-week high of Rs 644 on August 16, 2021 and a 52-week low of Rs 394.05 on October 19, 2020.
It is trading 6.75 percent below its 52-week high and 52.4 percent above its 52-week low.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
