Motilal Oswal has downgraded Bharti Airtel with a revised target price of Rs 370.

"We are downgrading FY13/14 Ebitda estimates for Bharti by 4-6 per cent and EPS by 23 per cent largely on lower India mobile RPM/margins given adverse pricing environment. Our recent industry interactions suggest pricing pressures continue in 1QFY13; the industry has not been able to fully pass on the impact of the increase in service tax, and the regulatory restrictions on sales of certain bundled top-up vouchers," the brokerage said.

"We are incorporating Rs 230 crore forex loss in the first quarter of FY13 for Bharti primarily due to estimated 4-5 per cent loan-weighted depreciation in African currencies during the quarter. We are also tweaking our Africa business estimates to incorporate currency swings as well as lower subscriber adds/margins. We now expect FY13/14 Ebitda of $1.3/1.6 billion implying an Ebitda CAGR of 21 per cent.

Lack of regulatory clarity on 2G spectrum auction remains an overhang given the potential spectrum liability, and pricing pressure from challengers with unviable business models.

"We maintain a buy recommendation on the stock with a revised target price of Rs 370 (Rs 400 earlier) based on 7.5 times FY14 EV/EBITDA for India and SA business, 5 times EV/Ebitda for Africa business and Rs 14,200 crre impact for potential regulatory outlay," the brokerage said.

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