Bharti Airtel Ltd, India’s top wireless services company, had its share price target raised 9% at HSBC Holdings Plc., which said the company will continue to expand market share.
The one-year target was lifted to Rs1,110, HSBC analysts Tucker Grinnan and Rajiv Sharma said in a note to clients on Tuesday.
“Bharti has seized a clear market lead based on its aggressive and sustained capacity expansion levels,” Grinnan and Sharma said. “Its coverage advantage has allowed the company to take market share in a rising market.”
India, the world’s fastest-growing wireless services market, adds almost six million new users on average each month, aided by a combination of low tariffs and penetration levels.
While more than 171 million subscribers pay rates of as low as a rupee a minute, the cheapest anywhere, less than 16% of the 1.1 billion country’s people have access to telephones.
New Delhi-based Bharti, 30.8% owned by Singapore Telecommunications Ltd (or SingTel), has 39 million users, giving it almost a 23% share of the market.
Bharti will have 25.2% market share by 2011 rather than 2013, Grinnan and Sharma estimated. Their prediction is based on plans by the company to spend $3.3 billion to $3.5 billion in the year to 31 March on networks.
The amount is 70% more than what Bharti spent in the previous year, and is in response to increased spending by smaller rivals Reliance Communications Ltd and state-run Bharat Sanchar Nigam Ltd.
Vodafone Group Plc., the world’s largest carrier, has announced plans for India after it picked up a controlling stake in Hutchison Essar Ltd, the country’s fourth-largest wireless company. Newbury, England-based Vodafone intends to spend $2 billion over two years in India to expand market share.
Bharti’s share rose 1.3% to Rs837.25 on the Bombay Stock Exchange on Tuesday.
HSBC’s target represents a 34% increase from the price of the shares at present.
The risk on the stock could be an extended delay in the release of airwaves by the government, a sharp fall in the revenue per minute, contraction in the operating margins and a de-rating of the Indian stock markets, the analysts said.