Bharti Airtel: Retain HOLD rating with target price Rs345.

Bharti Airtel

Reco: HOLD

CMP: Rs328

Target Price: Rs345

Results miss estimate, Retain HOLD

·      Q2FY11 PAT of Rs16.6bn misses estimate of Rs19.2bn on absence in domestic revenue growth owing to seasonality and margin pressure in African operations

·      ARPU fall of 6.4% QoQ led by 5.4% drop in MOU as realization remains largely stable at Rs0.44/ minute.

·      Cut EPS estimate by 8.5% /6.3% to Rs18.3 /21.6 for FY11E/12E due to African margin pressures and higher tax.

·      Valuations at 15.2x EPS and 6.9x EBIDTA provide comfort. Retain HOLD rating with target price Rs345.

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