Idea Cellular to be the top pick among the telecom stocks: Rajat Rajgarhia

In a chat with ET Now, Rajat Rajgarhia, MD-Institutional Equities, Motilal Oswal Securities, shares his views on top telecom stocks. Excerpt:

ET Now: Does telecom has the potential to be the dark horse for 2014?

Rajat Rajgarhia: Telecom will be one of the top sectors. I do not think that it is dark horse anymore given the big performance that you have seen in stocks like Idea. However, Bharti has a lot of catch up to do because investors now want the profit numbers to come in it.

While we have seen EBITDA growth becoming reasonably good in the last two quarters, that trend should sustain. Once you see this spectrum auction getting over, you will see this sector getting more traction. The trend is very clear: by both voice and data, the RPM trend is up; it is going to provide significant operating and financial leverage to companies. As the balance sheet gets healthier for the entire sector, there is a lot of money to be made.

Idea which delivered very well in 2013 will be another top stock for 2014 but this will be a year when Bharti will have to do a catch up because of the lag in performance that it did in 2013 vis-à-vis the sector.