Bharti Hexacom share zooms 8% on ‘buy’ call by Jefferies

Shares of Bharti Hexacom Ltd zoomed as high as 8.1% to rise to day's high ₹877 on the BSE today following brokerage major Jefferies' 'buy' call on the stock. The brokerage initiated its coverage on the recently listed stock, with a target price of ₹1,080, nearly a 25.4% upside from yesterday's closing session price.

At 12.15 PM, shares of Bharti Hexacom were trading 5.68% up at ₹851.75, below its all-time high of ₹879.9. At the current share price, the company's m-cap stands at ₹42,660 crore. Apart from Jefferies, another brokerage JM Financial Bharti, also initiated coverage on the stock, with a "BUY rating". However, the share is currently trading beyond its target price of ₹790/share.

Airtel (Bharti) is the promoter of Bharti Hexacom Ltd (BHL) and holds a 70% stake in the company. Post-IPO, the government-owned TCIL’s stake is down to 15%, while public investors own 15%. BHL provides consumer wireless (mobile), fixed-line and broadband services in Rajasthan and North East (NE) circles under Bharti’s brand “Airtel”.

Wireless business constitutes 97-98% of its revenue while the balance 2-3% is from broadband business. BHL is the market leader in NE with a revenue market share (RMS) of 52.7% in 9MFY24 (up from 42% in FY21), while it is second in Rajasthan with an RMS of 40.4% (up from 32.7% in FY21).

The initial public offering (IPO) of Bharti Hexacom made a stellar debut on the stock exchanges last Friday as the shares of the company listed at ₹755, a premium of 32.45% over the IPO price of ₹570 apiece. Post listing, Bharti Hexacom shares surged as much as 35% and touched a new high of ₹768.95 on the BSE.

The Delhi-based Bharti Hexacom raised ₹4,275 crore via IPO, at a total market value of ₹28,500 crore, received a good response from investors, with the issue subscribing by 29.88 times. Segment-wise, the issue was subscribed 2.83 times in the retail category, while the portion set aside for qualified institutional buyers (QIB) and non-institutional investors (NII) received 48.57 times and 10.52 times bids, respectively. The company had reserved 75% of the issue size for QIBs, 15% for NIIs, and the remaining 10% for retail investors. Ahead of the IPO, the company raised ₹1,923.75 crore from anchor investors by allocating 3.37 crore shares at the upper end of the price band of ₹570 per share.

Incorporated on April 20, 1995, Bharti Hexacom is the largest mobile telephony services in Rajasthan and North Eastern circles in India, which comprises the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.

On the financial front, the telecom firm ended the financial year 2022-23 with a net profit of ₹549 crore, down 67.2% compared to the previous year, while revenue from operations rose 21.7% to ₹6,579 crore in FY23. For the six-month ended September FY24, net profit fell 64.6% year-on-year to ₹69 crore, dented by higher tax costs and exceptional loss, but revenue increased 8% YoY to ₹3,420 crore.