Bharti Hexacom rallies 11%; hits new high in weak market on healthy outlook

The stock price of Bharti Hexacom has more-than-doubled, zooming 182 per cent against its issue price of Rs 570 per share

Bharti Hexacom share price hit a record high of Rs 1,606.20 as it surged 11 per cent on the BSE in Wednesday's intraday trade, in an otherwise weak market, on a healthy outlook. The stock of the telecom services provider surpassed its previous high of Rs 1,565.35, which it touched on September 27, 2024.

 

At 12:56 PM, Bharti Hexacom shares were trading 8 per cent higher at Rs 1,568.60, as compared to a 0.69-per cent decline in the BSE Sensex. The average trading volume on the counter jumped four-fold with around 2.4 million equity shares, together, changing hands on the NSE and the BSE.

 

Currently, Bharti Hexacom share price has more-than-doubled, zooming 182 per cent against its issue price of Rs 570 per share. The company made its stock market debut on April 12, 2024.

 

Bharti Hexacom is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India, which includes the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. It offers services under the brand 'Airtel'.

 

In the September 2024 quarter (Q2FY25), Bharti Hexacom's revenues grew 20.7 per cent year-on-year (Y-o-Y) to Rs 2,098 crore. Mobile data traffic stood at 1,524 PBs in the quarter, registering a solid Y-o-Y growth of 29.7 per cent.

 

Overall earnings before interest, taxes, depreciation, and amortisation (Ebitda) grew 21.8 per cent Y-o-Y to Rs 1,046 crore in Q2FY25. Ebitda margin improved from 49.4 per cent in Q2FY24 to 49.9 per cent in Q2FY25.

 

Under the brand 'Airtel', Bharti Hexacom launched India's first network-based, AI-powered spam detection solution to curb the spam menace. A first-of-its-kind solution by a telecom service provider in the country, the tool alerts customers in real-time on all suspected spam calls and SMSes. The solution is free of cost and will get auto-activated for all Bharti Hexacom customers without them having to raise a service request or download an app.

 

Rajasthan and Northeast, the telecom circles in which the company operates, provide long-term growth opportunities. Though not densely populated, these regions, with significant scope of expansion of digital services, contribute significantly to the nation's economy, according to analysts.

 

Both mobile and fixed line data penetration is lower than the national average in Rajasthan and the Northeast, providing the potential for long-term growth for the telecom industry. The Government's focus on improving connectivity and infrastructure in these regions further opens the doors to promising opportunities. Over the years, Bharti Hexacom has made significant investments across these regions to bolster connectivity and support economic growth, the company said in its FY24 annual report.

 

Analysts at JM Financial Institutional Securities believe India wireless business tariff hikes are likely to be more frequent, going forward, given the consolidated industry structure and higher average revenue per unit (ARPU) requirement for Jio also to justify significant 5G capex and given Jio’s potential IPO.

 

ARPU growth, aided by likely moderation in capex, will drive Bharti Hexacom's free cash flow growth from FY25, enabling it to get to net cash by FY29; this will also aid in accretion in equity value. The brokerage firm said Bharti Hexacom is a midcap pure-play on the wireless ARPU growth story. It reiterates 'Buy' rating on Bharti Hexacom with a 3-year target price of Rs 1,980.