3 November 2009
Bharti Airtel, is Asia’s leading integrated telecom services provider with operations in India and Sri Lanka. Bharti Airtel has been at the forefront of the telecom revolution and has transformed the sector with its world-class services built on leading edge technologies. Bharti Airtel is the largest mobile telephony operator in the GSM space in India. Apart from being the largest player in the mobile segment with subscribers in all the 23-telecom circles of the country, Bharti Airtel also provides varied services like fixed line, broadband and retail Internet access.
The structure of Bharti Airtel is divided into three business units: Mobile Services, Airtel Telemedia Services and Enterprise Services. It has recently launched a new service called Direct-to-Home (DTH) service by the name of Airtel Digital TV. Recently much advancement happened in Bharti Airtel like Apple iPhone 3G came in India via Airtel and Airtel Digital Service launched during the second half of 2008.
Bharti Airtel is a professionally managed company with a dynamic, innovative and focused management. Mobile communication segment has bright growth opportunity in India. Bharti Airtel is the market leader in India.
The company posted sales of 373 billion for the year ended March 2009. During the period FY05 to FY09, the company grew its sales and profits at compounded annual rates of 46% and 59% respectively. The operating profit margins during the said period have never dipped below 33%. The NPM have shown a steady increase from 15.24% in Mar05 to 22.67% in Mar09. The reported return on net worth has always been over 27%, touching the high of 35.23% in Mar07. This just goes to show what fantastic value Airtel has created for its stakeholders. The company has been steadily reducing its debt levels for the last 5 yrs.
The company has recommended its maiden dividend of Rs 2 per share (dividend payout of 5%). Keeping in mind that it has crossed its peak capex requirements (for spreading its presence across India), the company expects to generate free cash flows and subsequently reward its investors in return.
The future of the telecommunications industry in India continues to look promising. India has the worlds second largest population and that means there will be a growing need for telecommunications services. With an estimated middle class of 500 million within a decade, India’s consumer demand will provide the telecommunications industry with plenty of room to grow. As is common in most countries, the telecommunications indystry in India is controlled by a few powerful players who dominate the market. Bharti Airtel is the largets of these companies, with 24.7% of the market as of the forth quarter of 2009. Its next largest competitors are Reliance Communications with 17.7% and Vodafone Essar with 17.4%.
Bharti Airtel’s well capitalized position, strong cash flows, and dominant market share make it a company with excellent prospects looking forward. In addition, its corporate ties to Bharti Enterprises provides it with the opportunity to engage in profitable cross-promotional advertising with other popular brands.
Why it is best time to enter in this company? At current market price of 299.95, it is a the lower end of 52 weeks low. The current condition in the telecom industry such as price war created a negative sentiments in the market and caused the crash in the market price of its shares. But this is just a short term concern and large operators like Bharti Airtel can easily come out of this mess and the company have a better long term prospects. Its long term investment outlook is very positive as it dominates a market that has enormous growth prospects. The share price has stabilized around $300 and is a buying opportunity to obtain ownership in a solid company at a deep discount. The stock is a bargain and an excellent way for investors to diversify their portfolios.
Yes, now it is your company! Get to know more about the company, keep an eye on it. You will not sell your company unless and until it is really warranted.