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The Bharti Hexacom IPO, valued at Rs 4,275 crore, commenced on April 3 and is set to conclude on April 5, marking the Bharti Airtel group’s first public stock sale in 12 years and the inaugural public issue of the 2024-25 financial year. This offering follows the last IPO by the Bharti group, Bharti Infratel (now known as Indus Towers), listed in 2012.
Analysts have predominantly recommended subscribing to the issue, citing reasonable valuation and strong parentage, despite concerns over high debt and recent financial volatility.
Offer details indicate that Bharti Hexacom, a Bharti Airtel subsidiary, is solely offering 7.5 crore shares for sale, with proceeds directed to selling shareholder Telecommunications Consultants India, resulting in a 15 percent stake dilution. The IPO price band is set at Rs 542-570 per share.
Promoter Bharti Airtel holds a 70 percent stake in Bharti Hexacom, with Telecommunications Consultants India holding the remaining 30 percent.
Market experts highlight Bharti Hexacom’s strategic positioning in the domestic telecommunication market, benefiting from synergies with its parent company. Factors such as higher entry barriers for new players and ongoing capital expenditure requirements contribute to a positive outlook for the company’s operational and financial performance.
Regarding financial metrics, analysts consider the IPO’s valuation reasonable compared to peers, with a trailing twelve-month EPS of Rs 9.67 and FY24 annualized EPS of Rs 7.52, resulting in a P/E ratio of 58.95x / 75.80x post-issue.
Moreover, Bharti Hexacom is poised to leverage Bharti Airtel’s nationwide launch of 5G services, aiming for an efficient capital structure and debt repayment through internal accruals, backed by substantial liquid investments and cash reserves.
Bharti Hexacom’s market share dominance in Rajasthan and the North-East telecom circles, along with its healthy revenue growth and expanding EBITDA margins, further strengthen its investment appeal.
Comparing with industry peers, Bharti Hexacom holds a significant market share in its operating regions, alongside major anchor investments from renowned institutional investors, including Blackrock Global Funds and Morgan Stanley, among others.
Overall, the Bharti Hexacom IPO presents investors with an opportunity to tap into a well-positioned telecom player with strong growth prospects, backed by a robust parent company and favorable market dynamics.
