Bharti Group has become India's fourth biggest corporate house among privately owned businesses, surpassing Sun Pharma Group in terms market capitalisation (market-cap), and is fast closing in on Mukesh Ambani-controlled Reliance Group.
Both Bharti Group with Bharti Airtel and Bharti Infrastructure, and Sun Pharma Group with Sun Pharmaceutical Industries and Sun Pharma Advanced Research (SPARC), have two listed companies each under their fold.
Sunil Bharti Mittal-promoted Bharti Group now commands a total market-cap of Rs 260,871 crore, after the Mukesh Ambani-led Reliance Group, which occupies the number three rank with Rs 295,533 crore in m-cap.
By comparison, the market value of Sun Pharma group stands at around Rs 242,208 crore. The market capitalisation of these groups has been derived after taking into account market values of all their listed companies as on May 29, 2015.
In calendar year 2015, Bharti Group has already overtaken Aditya Vikram Birla (AV Birla) Group and ICICI Group in overall business house m-cap rankings. Tata Group tops this list with total market cap of Rs 831,747 crore of its 30-listed companies, while HDFC Group at second with m-cap of Rs 466,881 crore.
Core business
Analysts say that the core business of the Bharti remains on a strong footing and has been the key driver of the stock performance that has seen its group stocks do well.
Explains Vinay Khattar, associate director and head of research at Edelweiss: "There are a few positives playing out for the telecom sector and the company as well. There is a feeling that the competitive pricing phase that was playing out from many years is behind us. As a result, average revenues per user (ARPUs) will start to move up. There has been a significant improvement in the data usage by consumers, which is also a positive for the company."
Khattar also believes that monetisation of non-core assets for Bharti Airtel is the next big thing playing out. "The company plans to stay away from its non-core businesses like retail. So divestment in the non-core businesses and an improvement in the core business is having a positive impact," he says.
Thus far in calendar year 2015, Bharti Infratel has surged 42%, while Bharti Airtlel, the group's flagship company, has gained 21% as compared to 1.2% rise in the S&P BSE Sensex. Bharti Airtel touched a record high of Rs 435, while Bharti Infratel hit a lifetime high of Rs 505 during intra-day trade on Friday.
U R Bhat, managing director, Dalton Capital Advisors, says: "Bharti Group has been doing excellent although their foray into Africa hasn't started yielding much. They certainly have a global ambition. Their other businesses, too, like retail haven't done very well. However, the core business remains on a strong footing."
Results impact
Sun Pharma, on the other hand, has lost over 8% after the company reported a 44% year-on-year drop in its net profit at Rs 888 crore for the fourth quarter ended March 2015 (Q4), on the back of the Ranbaxy acquisition. Sun Pharma Advanced Research, the other group company, too, lost 3% to Rs 403 on the BSE on Monday.
Post the recent results, analysts have trimmed their near-term growth forecasts for Sun Pharma though they remain optimistic on the prospects of the company from a long - term horizon.
BofA-ML, for instance, slashed its target price for Sun Pharma to Rs 1,063 from Rs 1,100 and maintained 'Neutral' rating on the company. It also trimmed its FY16/17 EPS by 6%/4% on Ranbaxy consolidation.
Karik Mehta, an analyst tracking the company with ICICI Securities believes that the weakness in earnings growth due to integration of Ranbaxy's operations is temporary.
"We downgrade Sun Pharma to 'hold' from Buy with a revised sum-of-the-parts based target price of Rs 921/share. The key upside risks to our view are better than expected operational performance by Taro, faster than expected visibilities of synergies post integration of Ranbaxy's operations and assets, and earlier than expected normalcy of production at Halol plant," he says.
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