Reliance Jio effect fading? At least, the fizz in Bharti Airtel stock suggests so

Mukesh Ambani-owned Reliance Jio may have caught the telecom market by surprise with its freebies and made telcos bleed in terms of their financials but it has barely been able to affect the stock price of market leader Bharti Airtel.

The Sunil Bharti Mittal-owned firm, which is also the country's largest telco (in terms of subscribers) has gained 33.03 percent or 100 points on an year-to-date basis even as its reported a 74.89 percent fall in June quarter net profit to Rs 367 crore.  The Sensex gained 19 percent on year-to-date basis.

Also read: Jio effect: Airtel Q1 net profit tanks 75% to Rs 367 crore

In Q1 of the current fiscal, the company appeared to have controlled the quarter-on- quarter slide it had been experiencing since the entry of Reliance Jio in September 2016.

Its January to March quarter net profit came 72 percent lower at Rs 373.4 crore, hit by sustained predatory pricing by rival Jio.

Even brokerages are upbeat on the prospects of the stock.

Also read: After Reliance Jio, now Airtel to launch its own 4G VoLTE service by March 2018

Bank of America-Merrill Lynch (BofA-ML) has maintained a 'buy' rating on the stock with a target of Rs 426.

"The risk-reward ratio is getting increasingly favourable and the company is well placed to emerge stronger in both voice and data markets. Going forward, there is limited room for disappointment from Bharti Airtel's Africa numbers," the brokerage said in a note to its clients.

ICICI Securities in its report dated July 27, 2017 has given a price target of Rs 480 in 12 months with a Buy call.

"While there remains a risk of churn based on Jio's 4G feature phone, we believe strong incumbent like Bharti would counter it by offering bundled plan with other 4G feature phone vendors, albeit without any subsidy, " said the brokerage in its report.

Also read: Reliance Jio adds over 60 lakh customers, Bharti Airtel gets 20 lakh new users in June: TRAI

Bharti Airtel's longstanding competitor Idea Cellular also gained 18 percent on an year-to-date basis. In March, Vodafone India and Idea Cellular cleared a $23 billion merger, excluding the former's stake in Indus Towers Ltd.

The merger will create India's largest telecom firm with almost 400 million customers and 35 percent customer and 41 percent revenue market share.

The merger which is expected to be completed by 2018 will help the two firms put up a stronger fight against Reliance Jio which earlier disrupted the market with its free voice calls and low data prices.