Bumper Listing: Bharti Hexacom Debuts At 32% Premium From IPO Price On Exchanges; Buy Or Not?

Bharti Hexacom, a subsidiary of Bharti Airtel, witnessed a surge of 32.4% on its listing day, soaring to Rs 755 per share from its IPO price of Rs 570 per share. The strong listing gains far surpassed analyst expectations, which had pegged the premium at a more conservative 12-15%.

Bharti Hexacom's landmark IPO, valued at Rs 4,275 crore, marked India's most significant public issue in the past year, drawing fervent interest from investors. The subscription figures were nothing short of extraordinary, with the offering oversubscribed nearly 30 times its allotted quota. Leading the charge were qualified institutional investors, subscribing 48.57 times their allocation, followed closely by non-institutional investors at 10.52 times. Retail investors too displayed robust enthusiasm, subscribing 2.83 times the reserved portion.

The company's anchor book featured heavyweight global investors such as Capital Group, Fidelity, Blackrock, and ADIA, signalling strong confidence in Bharti Hexacom's growth trajectory. Through its anchor book, the Airtel subsidiary successfully raised approximately Rs 1,924 crore, bolstering its financial standing ahead of its public debut.

The public offer, which opened for subscription on April 3 and closed on April 5, comprised an offer-for-sale of 7.5 crore shares by Telecommunications Consultants India, the sole public shareholder in the company. This move allowed existing shareholders to divest their holdings while providing an opportunity for new investors to participate.

Established in 1995, Bharti Hexacom specializes in offering fixed-line telephone and broadband services primarily in the regions of Rajasthan and the North East. With a customer base of 27.1 million across 486 census towns, the company boasts an extensive distribution network encompassing 616 distributors and 89,454 retail touchpoints.

Despite its stellar market debut and promising growth prospects, Bharti Hexacom grappled with a 67.2% year-on-year decline in net profit for the fiscal year FY23, amounting to Rs 549.2 crore. However, market experts remain bullish on the company's future, citing its dominant position in the telecom sector and its potential for expansion into untapped markets.

Industry analyst Dayanand Mittal of JM Financial Services issued a bullish 'BUY' rating on Bharti Hexacom stock, with a target price of Rs 790 per share. Mittal underscored the company's robust growth potential, projecting an EBITDA margin improvement to 51.4% in FY26 and 57.1% in FY30. He attributed this growth to factors such as tariff hikes, premiumisation strategies, and cost optimization initiatives.

Mittal's analysis positioned Bharti Hexacom as a midcap pure-play on the wireless ARPU growth story, offering significant upside potential for investors. He emphasized key triggers such as regular tariff hikes and upgrades, as well as data monetization, driving a structural uptrend in ARPU.

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