Bharti Airtel downgraded to 'Hold' rating by MarketsMOJO, despite strong financial performance.

Bharti Airtel, one of the leading telecommunication service providers in India, has recently been downgraded to a 'Hold' rating by MarketsMOJO on September 5th, 2024. This decision was based on various factors such as the company's financial performance, technical analysis, and market trends.
While Bharti Airtel has shown healthy long-term growth with an annual increase of 12.99% in net sales and 55.44% in operating profit, its recent results in June 2024 have been positive. The company's operating cash flow has reached an all-time high of Rs 78,898.20 crore, and its return on capital employed has also seen a significant increase at 14.41%. Additionally, the operating profit to interest ratio has reached its highest level at 3.82 times.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. However, with a ROCE of 13.8, the stock is currently fairly valued with an enterprise value to capital employed ratio of 3.8. It is also trading at a discount compared to its average historical valuations.

Over the past year, Bharti Airtel's stock has generated a return of 78.64%, outperforming the BSE 500 index. However, its profits have only seen a modest increase of 4.9%, resulting in a PEG ratio of 26. This suggests that the stock may be slightly overvalued.

The company also has a high institutional holding of 43.91%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals compared to retail investors. Bharti Airtel has consistently delivered strong returns over the last three years, outperforming the BSE 500 index each year.

With a market capitalization of Rs 8,90,013 crore, Bharti Airtel is the largest company in the telecommunication sector, constituting 78.72% of the entire sector. Its annual sales of Rs 151,048.80 crore also make up 67.14% of the industry.

However, it is important to note that Bharti Airtel is a high debt company with a debt to equity ratio of 2.29 times. This indicates that the company may have a higher risk compared to its peers. Additionally, its return on equity (average) is at 8.82%, which suggests a lower profitability per unit of shareholders' funds.

In conclusion, while Bharti Airtel has shown strong growth and performance in the past, its recent downgrade to a 'Hold' rating suggests that investors should carefully consider their investment decisions and monitor the company's financial performance closely.