Nomura has reiterated its Buy rating on Bharti Airtel and raised its target price to Rs 2,355 from Rs 2,220, reflecting confidence in the telecom operator's long-term growth prospects. The brokerage expects the company to benefit from sustained growth in average revenue per user (ARPU), improving operating leverage and healthy free cash flow generation.

The brokerage projects Bharti Airtel to deliver a 14 percent compound annual growth rate (CAGR) in both EBITDA and operating free cash flow between FY26 and FY29. It also forecasts nearly 9 percent ARPU CAGR for the company's India mobility business during the same period, supported by an expected tariff hike in the third quarter of FY27 and continued premiumisation of its subscriber base.

Nomura believes the completion of Airtel's nationwide 5G rollout will allow capital expenditure to moderate in the coming years, enabling stronger cash flow generation and faster deleveraging. It added that Airtel remains one of the key structural beneficiaries of India's consolidated three-player telecom market.

The brokerage also highlighted what it considers an attractive valuation for the company. According to its estimates, Bharti Airtel's India telecom business is trading at an implied FY28 EV/EBITDA multiple of around 9.3 times, lower than the estimated 12.2 times for Reliance Jio, despite Airtel generating higher ARPU, stronger operating margins and superior free cash flow. Nomura believes this valuation gap is unjustified given Airtel's operational performance.

Beyond its core telecom business, Nomura expects additional growth from businesses including data centres, Airtel Money, cloud services, lending, fixed wireless access, private 5G networks and its increasing stake in Indus Towers. The brokerage also expects India's regulatory environment to remain supportive of the three-player telecom industry, with potential relief on licence fees or spectrum usage charges if required.

While maintaining a positive long-term outlook, Nomura identified Bharti Airtel's relatively high foreign institutional investor ownership of around 28 percent as a near-term risk. It noted that the stock could witness relatively higher selling pressure during periods of global market risk aversion despite the company's strong underlying fundamentals.