Bharti Airtel - FIIs are Keen to Dry Up Float

By Research Desk
about 3 years ago

We carried an item on the stock last week here, on 8th September. Requested to read that piece (Bharti Airtel - Sending LOUD & CLEAR message).

Bharti has announced the Rights Issue, at Rs. 535 per share, in the ratio of 1 share for every 14 shares held, opening on 5th Oct to 21st Oct, with RD at 28-9. Share will go ex rights from 27-9, this Monday. Those holding the shares, will get rights entitlement from Wednesday, which may get traded llatest from 5th October. Those who do not wish to subscribe rights, must sell their rights entitlemnt by 19th October. This deveelopment will also see renewed buying in the share in this week, till tomorrow, before share goes ex rights from Monday.  

Bharti Airtel rose from Rs. 586 to Rs.727 in last fortnight, a rise of Rs.140, giving a return of over 24%. Govt having given sops to telecom companies, like Moratorium of Spectrum Dues,  Converting Overdue intererst in Equiy or mortaorium of 4 years, with soft rate of interest of MCLR + 2% with annual rest, (against earlier of 4% and monthly rest), cahnge in AGR Calculation formula, record keeping resulting in ease of doing business etc etc.

But we see multiple gains specially seen for the stock, Firstly, Rights issue of Rs. 21,000 cr, on an attractive price, with friendly terms of payment, for growth capital, has kick started this upmove. ARPU estimated to rise to Rs. 200 by March 22, from Rs. 146 for June 21 quarter, was the second reason. Thirdly, launch of 5G, with new initiative on Technology upgradation, ahead of its rivals will reflect on the technology competence of the company. Fourthly, exit of Idea Vodafone is seen imminent, with Airtel likely to grab two third subscribers of Idea, due to Technology compatibility. Lastly, talk of Google making a big investment in the company, is likely to fructify in the next couple of months.

These factors made FIIs, OCBs, Funds and Institutional Investors, extremely bullish on the stock, who are already holding over 41% stake of the company, with 56% being held by the Promoters. This leaves about 3% float, of which, 7.45 lakh retail shareholders are holding 9.8 cr shares, with an average of 132 shares held by each investor, who generally never seen exiting from a rising stock. On the other hand, stock is seen in BIG accumulation, with huge cash buying seen for last 2 weeks or so, with counter also seen in an oversold zone in F&O.

FIIs now wish to have pure telecom exposure, who are seen moving from RIL to Airtel, while this move is likely to continue in the next 10 days or so.
Paucity of float can take share price move to interesting levels.

This is not a Buy or Sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.


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