Top telecom shares to buy: Bharti Airtel, Vodafone Idea, Indus Towers by Ambit Capital with new stock target price
Indian telecom stocks could be poised for further gains as tariff hikes, rising data consumption and opportunities in digital infrastructure strengthen the sector’s growth outlook, according to Ambit Capital. In a recent research report, the brokerage reiterated its positive stance on the sector, forecasting a 15% mobile tariff hike in December 2026, followed by 12% increases every two years over the next decade.
Ambit Capital named Bharti Airtel its top sector pick and maintained BUY ratings on Bharti Airtel, Indus Towers, Vodafone Idea and Bharti Hexacom. The brokerage believes improving pricing discipline, operating leverage and diversification into data centres could support earnings growth, although execution risks and potential regulatory changes remain important monitorables.
"Our positive view of the sector rests on our expectation of pricing discipline after Jio’s listing and the government’s desire for a three-private-player industry structure. Bharti Airtel is our top sector pick," said the brokerage.
Bharti Airtel: BUY | | Target price: ₹2,732 | Upside: 44%
Indus Towers: BUY | Target price: ₹532 | Upside: 39%
Vodafone Idea: BUY | Target price: ₹18.7 | Upside: 62%
Bharti Hexacom: BUY | Target price: ₹2,130 | Upside: 31%
The brokerage’s positive outlook rests on its expectation that telecom operators will continue raising tariffs to improve profitability. It believes the industry’s current economics remain challenging, with pre-tax return on capital employed at approximately 10% in FY26, below the cost of capital.
Ambit Capital expects the need for Vodafone Idea to improve its financial position, Reliance Industries’ objective of generating returns for Jio Platforms investors, and the sector’s investment requirements to support periodic tariff increases. It expects a 15% hike in December 2026, followed by biennial increases of 12%.
The report also highlighted the potential of rising mobile data consumption. Handset upgrades and continued 5G network investments could support higher usage, allowing telecom operators to raise prices while offering more data. The brokerage noted that Airtel’s decision to remove its entry-level 1.5GB-per-day plan in August 2026 could lift average revenue per user (ARPU) by 4.4%.
Ambit Capital said, “Consumer handset upgrades and telco 5G network investments will keep per capita data consumption rising, as in the past. This builds a compelling case for telcos to implement biennial 12% price increases over the next decade alongside more generous data allowances.”
Beyond mobile tariffs, the brokerage sees data centres and private cloud services as potential growth drivers. Airtel has outlined plans to expand its data-centre capacity from 240 megawatts to 1 gigawatt by the end of the decade. Edge data centres could also create opportunities for tower companies, although power and water availability remain key execution risks.
On the risks, Ambit Capital cautioned that satellite communications could challenge incremental monetisation by telecom operators. However, it believes regulatory safeguards and sovereignty considerations favour incumbent telecom companies. A potential government preference for introducing a new telecom operator also remains a risk to its sector view.
Ambit Capital expects Bharti Airtel and Reliance Jio to deliver revenue compound annual growth rates (CAGRs) of 16% and 15%, respectively, between FY26 and FY29. For Airtel, it forecasts a 15% revenue CAGR and a 31% adjusted profit after tax CAGR over the same period.
The brokerage believes the Street could be underestimating Airtel’s operating leverage and financial growth. Its revenue estimates for FY29 are 7% above Bloomberg consensus, while its profit after tax estimate is 11% higher. It expects Airtel’s consolidated revenue to rise to ₹3,254 billion in FY29, from ₹2,110 billion in FY26.
For Bharti Hexacom, Ambit Capital projects a 13% revenue CAGR and a 30% earnings-per-share CAGR between FY26 and FY29. It expects Vodafone Idea to begin curbing subscriber losses from FY28, supported by network investments, customer retention and tariff repair. The brokerage also sees scope to upgrade Vodafone Idea’s EBITDA margin estimates for FY28 and FY29.
Data centres are another opportunity, but Ambit Capital stressed that returns will depend on execution and customer mix. The report noted that payback periods have lengthened as competition and investment commitments have increased.
Ambit Capital said, “Execution risk, rather than finding the right customer, is the big risk, with water and power linkages emerging as choke points. DCs have become a ‘red ocean’ with payback periods stretching to 11 years currently versus 4-4.5 years pre-Covid.”
Overall, Ambit Capital’s investment thesis is built on higher tariffs, earnings growth and the expansion of digital infrastructure. While Bharti Airtel remains its preferred telecom stock, the brokerage has also assigned BUY ratings to Indus Towers, Vodafone Idea and Bharti Hexacom, with the outlook dependent on tariff implementation, execution and the regulatory environment.
Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior Sub Editor at LiveMint. Over the years, she has developed a reputation for sharp editorial judgement, a strong grasp of market dynamics, and the ability to translate complex financial developments into clear, engaging stories for a wide audience. <br><br> Her core areas of coverage include stock markets, leading listed companies, currencies, and commodities, with a particular strength in fast-paced, real-time market reporting. She is known for handling breaking market news, earnings-driven stock movements, and macroeconomic developments with speed, accuracy, and context—qualities that are essential in financial journalism. <br><br> Pranati has built a diverse and credible professional track record across some of India’s most respected news organisations, including MintGenie, CNBC-TV18, Business Standard and EconomicTimes.com. During her stints at these platforms, she produced data-driven market stories, curated and steered live blogs during volatile trading sessions, and conducted interviews with market veterans, fund managers, economists, and industry experts. Her work often combines on-ground reporting with analytical depth, helping readers make sense of daily market fluctuations and longer-term trends. An alumnus of the Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi, Pranati brings a strong academic foundation to her journalism. She specialises in real-time financial reporting, with a keen focus on precision, balance, and insight, aiming to decode market movements in a way that is both informative and accessible to readers across experience levels.
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