Bharti Airtel

Yes another popular index stock that's recently being battered to low prices. Here's an analysis on Bharti Airtel by Vishal, and a very good discussion thread in comments section.

My own analysis about future of the business is here. Yes, from an IV calculation point of view, it is still expensive at Rs 238, which is the recent multi-year low. But I strongly believe in the business future when a large number of people will start using data intensive applications and services, and hence I'm comfortable buying Bharti below Rs 260 (yes its probably an anchoring bias considering my average cost being at about Rs 260). Bharti constitutes about 7.7% of my portfolio currently, and when price drops, I'm waiting to increase my exposure to about 12%

Here're my trades and investment actions in Bharti airtel:

This is one stock that I'll hold for many years, even decades, and keep adding more as it falls. Giving a glimpse of my IV calculation:

1. Graham's hidden bond value of Rs 100, certainly not a right metric to value a telecom stock due to huge growth prospects

2. Using historical P/E as a measure, the value is Rs 400

3. Using modified Graham's number, the value comes at Rs 307

4. Using DCF on FCFF, the value is Rs 170

5. Half PEG is again not a right measure for Bharti

This gives a fair price of Rs 219, so Rs 260 is about 20% more expensive, but I'll be comfortable to buy considering the fact that future EPS will increase as business revives from near low levels of profits, and the deployed network infrastructure begins to pay off with 3G and 4G services in future years.

Happy to find a good business that I'll hold for at least a decade :-)