Category: Personal Finance

Target Price

The Current Market Price (CMP) of Bharti Airtel is Rs. 742. The brokerage firm, ICICI Direct has estimated a Target Price for the stock at Rs. 860. Hence the stock is expected to give a 16% return, in a Target Period of 1 year.

Company performance

Assuming conservative pass-through of ~75% to EBITDA, the wireless EBITDA will rise by ~29% from current levels. Additionally, Bharti Airtel (Airtel) announced a tariff hike in its prepaid segment with ~20% tariff hike across the board, ~25% hike in base entry-level 2G tariff with effect from November 26, 2021. Market Capitalisation of the company is Rs. 4,07,561 crore.

Comments by ICICI Direct

Maintaining a Buy rating, ICICI Direct said, “With prepaid subscriber and revenues forming ~95%, ~87-88% of overall subscribers, revenues, respectively, the tariff hike will result in wireless revenues increasing by ~19%. We highlight that we had built in ~15% step-up tariff over Q4FY22 and FY23. Thus, tariff increase implies accelerated (and bit higher) benefits with 5%, 6% upgrade in our FY22, FY23 India EBITDA estimates and ~3.6%, 4.5% upgrade in overall EBITDA estimate in FY22, FY23, respectively.”

About the company

Bharti Airtel Limited is a leading global telecommunications company with operations in 18 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 3 mobile service providers globally in terms of subscribers. In India, the company’s product offerings include 2G, 3G, and 4G wireless services, mobile commerce, fixed line services, high-speed home broadband, DTH, enterprise services including national & international long-distance services to carriers.

Disclaimer

The above stock was picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Jerome Powell as Fed Chair

Now, after US President Joe Biden has finally announced that Jerome Powell will remain as the US Federal Reserve Chairman in the next term, for the upcoming 4 years, gold rates went down sharply in the gold futures markets, and the spot market. On the other hand, US Dollar gained a 15-month high and US Treasury yields also increased, after the announcement. Earlier, it was anticipated that Biden might pick Lael Brainard as the Fed chair, who is more dovish than Powell, but the final decision has dropped that speculation.

Gold rates

Along with gold, silver prices are also down, while gold is being quoted at a two-week low rate. Comex December Gold Futures stood at $1808/oz till November 22, while in the spot market gold stood at $1808.6/oz till last traded in the morning, on November 23. Gold rates range at around $1805/oz is concerning for gold traders, but it will be profitable for investors and common buyers all over the world.

Inflation

Analysts were eyeing for a $1900/oz and above for gold as the inflation is not expected to fall significantly very soon, and the US Fed is not ready to hike the interest rate this year. But this significant drop can keep the gold rates subdued globally for the time being. However, if inflation continues to surge, gold rates will hike again in the international markets.

As Powell is going to hold the Chair of US Fed, analysts are anticipating that Powell will retain the same monetary policy. Hence, without any more speculation about dovish policy, gold rates are dropping globally. Additionally, oil prices also stood at a six-week low overnight, after Biden announced Powell’s name as Fed Chair.

Expert’s opinion

Analyst Jim Wyckoff told Kitco News, “It can be argued that the Powell news was just an excuse for the shorter-term gold and silver futures traders to ring the cash register and take profits after recent good price gains. Reason: The marketplace generally expected Powell to be reappointed and gold should not have reacted the way it did. Nothing has changed for the metals markets, fundamentally, from last Friday’s closes. No significant chart damage was inflicted in gold or silver today and their near-term price up-trends remain in place. The metals markets are likely to continue to be supported by the inflation trade-meaning the metals will continue to be sought out as a hedge against rising and even problematic price inflation.”

Indian gold rates

In India, gold rates are also on the verge of falling. On November 23, 22 carat gold rates, quoted at Rs. 48,200, and 24 carat gold rates Rs. 49,200. Since November 18, Indian gold rates started to fall significantly, and that trend is expected to continue now. This will certainly improve gold demand in India and will be profitable for common buyers. After the festive season of Diwali, Indians are having the wedding season now. So, a fall in gold rates will be bankable for them.

The most trusted saving destination is a bank account, particularly the Fixed Deposit (FD). The bank that offers the highest interest rate on the deposits whether it’s saving or FDs is the more searched destination. Out of these two, FDs are considered the safest saving option as it comes with a low market risk that also offers a high return on the deposit.

Interest rates vary based on the bank and customers such as senior citizens and the general public. FDs are great when it comes to tax savings.

Yes Bank and IndusInd Bank offer the best rates

Yes Bank and IndusInd Bank are two banks that offer the best interest rates to their customers on their Fixed Deposits. Both the banks are private sector banks and have a wide reach in the country. When compared to larger peers from the private sector or government sector, the interest rates being offered by these banks is a good 0.75 to 1% higher.

We have not considered the small finance banks or cooperative banks, while making a comparison.

Yes Bank offers 3.25% to 6.50% and 3.75% to 7.25% to general and senior citizens respectively. Followed by Yes Bank, IndusInd Bank offers 2.50% to 5.50% and 3.00% to 6.00% on FDs to general and senior citizens respectively. The tenure of FD in Yes bank varies from 5 to 10 years. Whereas, compared to the other banks, the rate of interest by these two banks is attractive, which makes them a good choice for savings.

It is always important to compare the rate of interest before making any kind of saving decision in banks. Saving in FDs is now considered a traditional way of investment but it is still a hot and safest destination for many.

Invest for shorter term tenures in bank fixed deposits

As there is a possibility that interest rates could go higher, we recommend that investors should take the short-term tenure for bank deposits. Globally, there are risks to inflation and many central banks around the world are looking at the possibility of hiking interest rates. Therefore, investors should look at short term tenure for fixed deposits. There is the possibility that even the Reserve Bank of India could hike interest rates considering that inflation in India has begun to trend higher.