On
Bharti Airtel has been part of our portfolios for some time now. Obviously it was languishing in between because the tariff hikes, which the entire industry had been expecting for the last two years, did not follow through because of pricing being kept low by Jio. Now with the entire Vodafone news flow going around, investors are taking a bet that either ways if Vodafone revives or gets sold out or there is some negative operational issues with Vodafone, some improvement is imminent and to that extent Bharti is the only pure play telecom company ex of
and is likely to benefit the most.
There is a possibility that the stock could move much higher over the next year. In the near term, having rallied already, it could consolidate or it could move up because in the current market it is tough to predict the pace at which stocks move. But directionally going forward, for long-term investors, it should do well.
Is it really so simple that disadvantage Vodafone equals advantage Bharti because Bharti too has the ongoing AGR issue?
AGR issue is well factored into the stock price and if AGR issue was not there, Bharti would have been much higher. My view is that either ways, either some resolution happens for Vodafone or the resolution does not happen and it gets prolonged. My base case still is that Vodafone will exist in one way or the other with the same or a different promoter set. That is something which need to see but irrespective of that, we are reaching a stage where the price competition is no longer going to be there. On the tariff side, we have already seen some moves from Bharti followed by Vodafone over the last few weeks and we could actually see pricing move up and this is a very fixed cost industry so once the top line starts increasing it entirely flowing through to the bottom line. Once the average tariffs ARPU starts moving up, it will work on the positive side.
All the negative news on Vodafone front makes consumers jittery and they start shifting to Airtel or Jio. Secondly, there comes one stage in the industry where the bottoming happens and I think we are at that stage.
SBI’s performance shows asset quality outcome has been strong. We have seen a strong 3-3.5 month of up move in SBI but is the visibility strong enough to buy afresh at these levels?
The result actually was a mixed bag and two, three things are very important; one on the net interest income front, they underperformed significantly and so net interest income was around Rs 1,000 crore less than expectation and that is the bread and butter for any bank. The advances growth is so slow and there is so much excess liquidity on their balance sheet, that the net interest income growth did not happen, that is one part.
Secondly, even on the asset quality side, the management said they are pulling back in July, all which is guidance. I do not why the managements give guidance month by month because as the quarter plays out, we do not know the way it goes.
Secondly, a lot of the NPA built up as the management already stated was in the housing loan segment which is supposed to be the most secure lending segment. So the excitement around SBI performance think is in excess. The only good thing working for SBI is that their subsidiaries are doing well. SBI Life, SBI AMC — all are doing well and that subsidiary value continuously keeps on going up and adds to the value although the bank keeps on performing averagely.
In my view, the results are nothing great, the outlook is nothing great but because of the valuation of the subsidiaries the downside to the stock would be limited.
On Thursday, banking stocks are a little bit under pressure with what is happening to Vodafone?
Yes, for
and IDFC it is obviously related to that because as a percentage of their total advances, their exposure to Vodafone Idea is quite substantial. And the possibility that it will go into NPA category before any sort of resolution happens is increasing by the day and those fears are flowing in, especially if you look at IDFC Bank. If a big exposure goes into an NPA category, it will have a significant impact on the balance sheet.
