Bharti Hexacom sets price band at ₹542-570 for its ₹4,275 cr IPO; issue to open on Apr 3

Bharti Hexacom, a subsidiary of telecom major Bharti Airtel, has fixed the price band at ₹542-570 per share for its initial public offering (IPO), which will open for subscription between April 3 and April 5. The telecom company looks to raise ₹4,275 crore at the upper band of the issue price, which is entirely an issue of an offer for sale (OFS) of 7.5 crore shares by its only public shareholder, Telecommunications Consultants India.

The lot size is 26 shares and in multiple thereafter. The minimum amount of investment required by retail investors is ₹14,820 for one lot (26 shares) and a maximum of 13 lots, or 338 shares for ₹192,660. The allotment of shares to applicants is expected to be finalised on April 8, and the stocks are likely to be listed on the BSE and NSE on April 12, 2024.

Currently, Bharti Airtel holds a 70% stake (or 35 crore equity shares)  in Bharti Hexacom, while the Government of India through Telecommunication Consultants of India owns the remaining 30%, or 15 crore, equity shares in the mobile telephony services company. Under the OFS, Telecommunication Consultants of India will offload 7.5 crore equity shares, or 15%, stake in the company.

Bharti Hexacom had filed its draft red herring prospectus (DRHP) with the capital market regulator SEBI in January this year, while it received an observation letter on March 11. This is going to be the first IPO from the Bharti Group after a long gap of 12 years since the listing of Bharti Infratel in 2012.

As per the revised document filed with market regulator SEBI, the company has reserved 75% of the issue size for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and the remaining 10% for retail investors.

Established 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.  The company also provides fixed line and broadband services in Rajasthan. It offers its services under the brand ‘Airtel’.

As of September 30, 2023, Bharti Hexacom had invested ₹20,300 crore in capital expenditure in its future ready digital infrastructure. The company also derives significant synergies from its relationship with its promoter, Airtel, through the expansive digital infrastructure, digital experience and the digital services it provides to its customers.

Bharti Hexacom concluded the financial year 2023 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.

SBI Capital Markets Limited, Axis Capital Limited, BOB Capital Markets Limited, ICICI Securities Limited and IIFL Securities Limited are the Book Running Lead Managers (BRLMs) to the issue.

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