IPO from Bharti grp opens today. Should you bid?

The initial public offer (IPO) of Bharti Hexacom opened for subscription on Wednesday, April 3. Ahead of the issue launch, the company garnered just over Rs 1,900 crore in the anchor round.

Marquee anchor investors, who participated in the anchor book include Capital Group, Fidelity Funds, ADIA, Morgan Stanley among others.

Bharti Hexacom’s IPO is completely an offer-for-sale (OFS), without any fresh equity issue. Telecommunications Consultants India (TCI), the sole public shareholder in the company, will offload 7.5 crore equity shares or a 15% stake via the OFS.

Sunil Mittal-driven telco Bharti Airtel holds a 70% stake or 35 crore shares of Bharti Hexacom, and the remaining 30% shareholding, equivalent to 15 crore equity shares is held by non-promoter TCIL.

Bharti Hexacom IPO review

Analysts advised investors to subscribe to the Rs 4,275 crore issue as the company has strong parentage and an established brand along with a presence in markets with high growth potential

“Considering the FY24-annualized EPS of Rs 7.52 on a post-issue basis, the company will list at a P/E of 75.80 times with a market cap of Rs 28,500 crore, whereas its peer Bharti Airtel is trading at a P/E of 63.3 times. We assign a ‘subscribe’ rating to this IPO as it is available at a reasonable valuation compared to its peers,” said Marwadi Financial Services.

“Bharti Hexacom is focused on delivering a brilliant customer experience by transforming its services through innovative technology and digital tools, creating a seamless and delightful user experience. It has adopted an omnichannel strategy which has enabled it to engage with customers anytime, anywhere, thereby seamlessly transitioning between channels. Bharti Hexacom is also undertaking prudent cost optimization measures to improve profitability,” said Stoxbox.

The issue is valued at a P/E of 75.8x on the upper price band based on FY24 earnings, which is fairly valued, it said while recommending a ‘Subscribe’ rating for the issue.

“At the upper price band company is valuing at P/E ratio of 52.3x of its FY23 earnings with a market cap of Rs 2,85,000 million post issue of equity shares and return on net worth of 13.8%. We believe that valuations of the company is fairly priced and recommend “Subscribe – Long Term” rating to the IPO,” brokerage Anand Rathi said.

Bharti Hexacom IPO price band

The IPO, which closes on April 5, is priced in the range of Rs 542-570 per share and investors can bid for 26 shares in one lot.

Also Read: Bharti Hexacom IPO. 10 things to know before subscribing to the issue

Bharti Hexacom IPO GMP

Ahead of the issue launch, the company’s shares traded at a premium of Rs 40 in the unlisted market.

Other details

Bharti Hexacom runs mobile services in Rajasthan and the Northeast circles of India. Airtel will continue to hold a majority stake in the subsidiary. The northeast telecommunication circles in India comprise the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura.

It has a spectrum portfolio with a varied pool of mid-band spectrum, which has enabled it to offer 5G plus services to customers.

For the six months ended September, Bharti Hexacom reported a revenue of Rs 3,420 crore, compared to Rs 3,167 crore a year ago. However, profit dropped to Rs 69 crore from Rs 195 crore a year ago.

The company’s topline has grown at a CAGR of 19.51% between FY21-23.

From an average revenue per user (ARPU) of Rs 135 in FY21, Bharti Hexacom has managed to improve this to Rs 195 during the six months ended September 2023. As of September 2023, the company had an aggregate of 29.1 million customers across both circles.

SBI Capital Markets, Axis Capital, BOB Capital Markets, ICICI Securities, and IIFL Securities are the book-running lead managers to the issue.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

William Murphy

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