Bharti shares take knock in rising market

Bharti Airtel shares fell on Friday despite a significant gain in benchmark indices. Bharti shares fell 3.6% while the BSE Sensex rose 2.8%.

Goldman Sachs, a global investment bank, cut earnings estimate on Friday for Bharti by 9.1% for the year ending March 2012. This means, the company’s net profit is expected to be lower that previously estimated for March 2012.

The company’s share price fell 3.8% to a 7-month low.

NDTV Profit's technical analyst Shakti Patra feels that Rs. 380-390 becomes a major resistance going forward. "Bharti was threatening to break down below a trend line support, which it has held on to since June'10. So, all that was needed was a trigger and it seems Goldman Sachs downgrade has provided it," he said.

Analysts last week, also expressed concerned that the sharp fall in rupee could hurt earnings of Bharti Airtel as it has a large foreign loan component.

“Considering USD/INR rate at Rs. 50, the FY2013E gross debt will increase to Rs. 55,903 from Rs. 49,484 earlier (assuming USD/INR rate at Rs. 45). This will lead to higher interest outgo, resulting in lower earnings,” said a sector analyst at Angel Broking in a note.

The sentiment was also dampened by reports of disruption in business activities in Nigeria

Recently, brokerage Credit Lyonnais Securities said in a note that the new spectrum policy to be released in 2012 would hurt Bharti Airtel negatively.

The new telecom policy carries significant risks not just on one time spectrum charges and 2G licence renewal costs but also re-farming. “Re-farming of 900MHz spectrum carries serious risk of business disruption and could cause additional financial burden. Regulatory risks will further hit returns and hinder planned deleveraging efforts,” the brokerage said.

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