Bharti Airtel: Nomura raises target, sees 28% upside

What changed in Nomura’s view

Nomura on Tuesday named Bharti Airtel its top pick in the telecom space and reiterated its ‘Buy’ rating on the stock. The brokerage raised its target price to Rs 2,355 per share from Rs 2,220. Based on the previous closing price of Rs 1,841 on the NSE, the revised target implies nearly 28% upside.

Nomura’s central point is valuation. It argues that the discount implied in Airtel’s valuation versus Reliance Industries-backed Jio Platforms is not justified, given Airtel’s operating metrics and cash generation profile. The report positions Airtel as more than a mobile operator, with multiple adjacent businesses that could support longer-term growth.

Why Nomura calls Airtel an “ARPU compounder”

Nomura described Bharti Airtel as an “ARPU compounder with multiple optionalities”. In plain terms, it expects Airtel to steadily increase average revenue per user (ARPU) and convert that improvement into profit and free cash flow.

Telecom has a high fixed-cost structure, especially after major network build-outs. Once the bulk of the network investments are complete, incremental revenue tends to translate faster into operating profit. Nomura said Airtel’s 5G rollout is largely complete and capex intensity is past its peak, setting up a phase where strong free cash flow can support deleveraging.

Tariff hike expectations and the FY27 swing factor

A key trigger in Nomura’s thesis is tariff action. The brokerage expects Airtel’s next major ARPU acceleration to come from a potential tariff hike, which it said is likely in Q3 FY27. It indicated a tariff repair of around 15% as an important swing factor for the growth trajectory.

Nomura noted that ARPU growth was around 5% in FY26 even without a tariff hike. It also highlighted that bundling mobile, broadband, and content can reduce churn by roughly half, which can lift customer lifetime value and support “stickier” ARPU and tariff hikes.

Free cash flow upcycle and deleveraging narrative

Nomura expects Bharti Airtel to deliver about 14% EBITDA CAGR and 14% free-cash-flow CAGR over FY26 to FY29. It attributed this to the combined impact of an expected tariff hike, operating leverage, and ongoing premiumisation.

The brokerage linked this expected cash generation to a deleveraging cycle, arguing that moderation in capex after the 5G build-out should improve financial flexibility. It also pointed to the potential for higher shareholder payouts over the next few years, supported by stronger free cash flow.

Optionalities beyond mobile services

Nomura said it likes Airtel’s “fundable options” and listed areas such as data centres, Airtel Money, lending, cloud, and a rising stake in Indus Towers. It also flagged 5G monetisation opportunities as being at an early stage, including fixed wireless access, private networks, and network slicing.

The brokerage’s framing is that Airtel’s market value should reflect these adjacencies rather than treating the company purely as a consumer wireless operator. This is part of why Nomura believes Airtel’s current discount to Jio is difficult to justify.

Valuation: Airtel vs Reliance Jio on EV/EBITDA

Nomura’s report compared implied valuation multiples for Airtel’s India telecom business with Reliance Jio. It said Airtel trades at an implied 9.3x FY28 EV/EBITDA, below the roughly 12.2x implied multiple for Reliance Jio.

The brokerage argued that a “premium operator priced at a discount” is unwarranted, especially when Airtel is described as having higher ARPU, superior margins, and stronger free cash flow. Nomura also said Airtel’s premium to global telecom peers can be justified by India’s market structure, ARPU runway, and multiple growth opportunities.

The ARPU gap and premium positioning

Nomura highlighted Airtel’s premium subscriber profile using ARPU comparisons. It noted Airtel’s exit ARPU of Rs 257 in FY26, compared with Rs 214 for Jio and Rs 174 for Vodafone Idea. Separately, it also cited Airtel ARPU at Rs 257 in the March 2026 quarter versus Rs 259 in the previous quarter, indicating largely stable sequential performance.

The brokerage’s broader argument is that India’s consolidated telecom market supports premiumisation strategies. It described Airtel as a structural beneficiary of a three-player market and cited an expectation that the regulatory environment could remain supportive, with the possibility of relief on licence fees or spectrum usage charges if required to preserve stability.

Nomura’s 10 stated reasons, in brief

Nomura listed 10 reasons for its preference, including premium leadership, the need for tariffs to reaccelerate ARPU, two additional growth engines in India (Homes and Airtel Business), strong growth in Africa, a possible IPO of Airtel Money in Africa, a free-cash-flow upcycle, easing promoter selling overhang, a value-over-volume approach, funded optionality, and higher dividend payout expectations.

It also pointed to rising data consumption in India and Africa as a supportive demand trend, along with increased consumer spending on telecom services and subscriber growth, aided by rising data usage and premiumisation.

Key facts and figures from the note

Market impact: what investors typically track next

For investors, Nomura’s call puts focus on three near-term signposts already mentioned in the report: whether tariff action materialises around Q3 FY27, how quickly capex moderates after the 5G rollout, and whether Airtel’s free cash flow trajectory supports faster deleveraging and higher payouts.

The valuation comparison versus Jio also becomes a reference point for market participants, especially when ARPU and EV/EBITDA multiples are used to argue that Airtel’s discount is not aligned with operating performance. Any updates on Airtel’s adjacent businesses, including Airtel Money and its stake in Indus Towers, are also likely to remain in focus given Nomura’s emphasis on “optionalities”.

Analysis: why the valuation discount argument matters

Nomura’s thesis combines two elements that are often assessed together in telecom: pricing power and capital intensity. If 5G capex intensity is indeed past the peak, then the link between ARPU growth and free cash flow can strengthen, which is why the brokerage emphasised a free-cash-flow upcycle.

At the same time, its “discount is unwarranted” argument is anchored in relative valuation. By pointing to Airtel’s implied multiple of 9.3x FY28 EV/EBITDA versus Jio’s roughly 12.2x, Nomura is effectively saying the market is not fully accounting for Airtel’s premium ARPU position and cash generation.

Conclusion

Nomura’s latest note reiterates its Buy stance on Bharti Airtel, raises the target price to Rs 2,355, and frames the stock as a premium telecom operator with improving free cash flow and multiple growth adjacencies. The brokerage’s key catalyst remains a potential tariff hike in Q3 FY27, alongside benefits from a post-5G capex moderation phase and continued premiumisation.