SynopsisNomura has named Bharti Airtel its top telecom pick, raising its target price to Rs 2,355 and calling it an 'ARPU compounder'. The brokerage highlighted the company's strong free cash flow generation, potential tariff hikes, and growth in its data centers, Airtel Money, and African businesses.AgenciesNomura on Tuesday named Bharti Airtel its top telecom pick and increased its target price to Rs 2,355 apiece, while highlighting that the implied valuation discount when compared to Reliance Industries’ Jio Platform is unwarranted.The international brokerage maintained its ‘Buy’ call on the stock. The latest target price implies an upside potential of nearly 28% from the stock’s previous closing price of Rs 1,841 apiece on NSE.Nomura calls Bharti Airtel an 'ARPU compounder'Calling Bharti Airtel an "ARPU compounder with multiple optionalities”, Nomura said that it is one of India’s premium telecom companies, and a structural beneficiary of a consolidated three-player market. “With 5G rollout largely complete and capex intensity past its peak, we believe the resulting strong FCF generation is playing out into a deleveraging cycle," it said.Nomura expects the company to post 14% EBITDA and FCF CAGR over FY26-29, driven by an expected tariff hike (likely in Q3 FY27), operating leverage, and ongoing premiumisation. "We also like Airtel’s fundable options – data centers, Airtel Money, lending, cloud, and a rising stake in Indus Towers," it added.The international brokerage believes that Bharti Airtel’s valuation at a premium to global peers is justified by India’s favourable market structure, long runway for ARPU growth, multiple optionalities vs global peers, and possible regulatory tailwind to support the three-player market."Indian telecom peers have been trading at structural premiums to global peers over a long time. We believe that Bharti’s valuation premium is justified due to its long-term ARPU growth potential, favourable market structure with two strong players with combined 76% subscriber market share in FY26, multiple growth adjacencies, and the absence of digital alternatives for India investment," it said.Also read: Airtel outpaces Jio in May wireless user gains; adds 2.93 million subscribersNomura's 10 reasons for backing Bharti Airtel:Nomura listed 10 reasons why it likes Airtel, which includes premium leadership, ARPU needs a hike to reaccelerate, two more India engines (Homes and Airtel Business), strong growth in African business, possible IPO of Airtel Money (Africa), free-cash-flow upcycle, easing promoter selling overhang, value over volume, funded optionality and higher dividend payout expectations.Premium leadership: Nomura noted that Airtel earned the highest exit ARPU of Rs 257 in FY26 vs Rs 214 and Rs 174 respectively for Jio and Vodafone Idea.ARPU needs a hike to reaccelerate: ARPU growth was around 5% even without a tariff hike in FY26, Nomura highlighted, with the next round of likely repair in Q3 FY27 being the swing factor with a tariff hike of around 15%. “Bundling mobile, broadband and content cuts churn by roughly half, which lifts lifetime value and makes ARPU and tariff hikes stickier,” it added.Two more India engines: Homes and Airtel Business are scaling into real second and third India engines, respectively, with Homes adding 4.2 million customers in FY26 vs 2.4 million in FY25 and the B2B order book up 17% with EBITDA margin jumping to 42% in FY26 from 37% YoY, Nomura said.Africa is the faster horse: The international brokerage highlighted that the company’s business in Africa grew revenue around 24% in constant currency terms in FY26 with 49% margins, has a young, underpenetrated base, while Airtel has lifted its economic stake to around 79%.A fintech IPO in the wings: Airtel Money (Africa) is heading for a listing that can crystallize value well above its last private mark of $2.6 billion, Nomura said, citing reports which claimed that Airtel Money (Africa) is eyeing a valuation of $10 billion. “With Airtel Africa holding ~77.9% stake in it, the fintech arm may represent a substantial portion of Airtel Africa's current market cap of $16 billion, in our view,” it added.The free-cash-flow upcycle: Nomura said Bharti Airtel’s capex has peaked. Its consolidated free cash flow reached around Rs 679 billion in FY26 and Nomura estimates it to reach Rs 1,011 billion in FY29.Deleveraged, and paying more: Nomura expects Bharti Airtel to step up its dividend payouts to 59% and 64% in FY27 and FY28, respectively.Funded optionality: Data centres (Nxtra scaling to 1GW, as per management, an RBI-licensed NBFC and a sovereign cloud add option value at low cost.Value over volume: “We believe India is near-saturation in terms of subscriber growth; so the story is value per user (premiumization, postpaid and feature-phone upgrades), not subscriber volume. Airtel having a lead over its peers in attracting premium customers may continue to sustain and help it maintain ARPU leadership,” said Nomura.The promoter selling overhang is easing: The Africa share-swap lifted promoter holding and shrank the Singtel equalization gap to around 3.6% in June 2026, easing the long-standing overhang, in Nomura’s view.Also read: Bharti Airtel raises stake in Airtel Africa to 79% in transaction worth Rs 28,000 crBharti Airtel share priceBharti Airtel shares gained around 1% to trade at Rs 1,859 apiece on Tuesday morning. The shares of the company have fallen over 2% in one week but gained around 2% in one month. The stock has fallen around 12% in 2026 so far.In the longer term, the shares of the company have fallen 7.5% in one year, but gained 112% in three years and 257% in five years. The company has a market capitalisation of nearly Rs 11.33 lakh crore.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. 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