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Bharti Hexacom's Rs 4,275-crore initial public offer will open for subcription on Wednesday, April 3. With a price band of Rs 542 to Rs 570, the issue will remain open till Friday, April 5.
At the upper price band, the company will command a market capitalisation of Rs 28,500 crore post the offer.
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Here's all you need to know about the offer:
About the company
Bharti Hexacom, a communications solutions provider, was incorporated in 1995 as 'Hexacom India'. Its name, however, changed to 'Bharti Hexacom' after telecom major Bharti Airtel picked 70 per cent stake in the firm in 2004.
The remaining 30 per cent stake rests with the Government of India through Telecommunications Consultants India Ltd (TCIL).
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It offers consumer mobile services, fixed-line telephone, and broadband services to customers in the Rajasthan, and the North East telecommunication circles in India, including Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura.
The revenue market share in the North-East circle was 52.7 per cent, and 40.4 per cent in the Rajasthan circle during the nine months ended December 31, 2023.
It holds telecommunication licenses and spectrum in its two circles, and has a spectrum portfolio with varied pool of mid band spectrum (1800/2100/2300 MHz bands).
Bharti Hexacom is present at 486 census towns and has an aggregate of 27.1 million customers across both the circles.
Bharti Hexacom's financials
The company's revenues from operations have grown at a compounded annual growth rate (CAGR) of 12.65 per cent from Rs 4,602.3 crore to Rs 6,579.0 crore between FY21 and FY23.
The Ebitda (earnings before interest, tax, depreciation, and amortisation) margins have improved from 24.7 per cent to 43.9 per cent during the same period. Besides, it reported a net profit of Rs 549.2 crore in FY23 vs a loss of Rs 1,033.9 crore in FY21.
BHL's net worth at the end of December 31, 2023 stood at Rs 3,978.8 crore, revenue from operations were Rs 5,220.8 crore, Ebitda was Rs 2,576.4 crore, Ebitda margin was 49.4 per cent, net profit was Rs 281.8 crore, Arpu for mobile services was Rs 197, and total borrowings wre Rs 6,253 crore.
Among key financial ratios, debt to equity stood at 1.4x as on December 31 last year, net debt to Ebitda 2.9x, return on net worth 7.1 per cent, and return on capital employed 10.7 per cent.
Bharti Hexacom's IPO issue
The offer is entirely Offer For Sale (OFS) of 75 million equity shares with face value of Rs 5 each.
75 per cent of the offer is reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors (NIIs), and 10 per cent for retail investors.
Retail investors can bid in lots of 26 shares and in multiples thereof, NIIs in lots of 364 shares, and QIBs 1,768 shares.
Bharti Hexacom grey market premium
As per IPOwatch.com, Bharti Hexacom is commanding a premum of Rs 50 in the unlisted market, a 9 per cent premium over the upper end of the price band.
Anchor investors
Bharti Hexacom raised Rs 1,923.75 crore from anchor investors on April 2. These included bids 97 institutional investors such as Blackrock Global Funds, Pictet, Smallcap World Fund, Capital Group, American Funds, Fidelity Funds, and Abu Dhabi Investment Authority.
That apart, Stichting Depository APG, Aberdeen, Schroder International, Treasurer of the State of North Carolina Equity Investment Fund, BNP Paribas Trust Services Singapore, Eastspring Investments, Morgan Stanley, and HSBC became anchor investors for the offer.
Should you subscribe? Here's what brokerages say:
Axis Securities | Not rated
The company operates in the Rajasthan and North-East telecommunication circles in India. As per the CRISIL Report, Rajasthan's customer base is expected to grow at 1.4 per cent to 1.5 per cent between FY23 and FY28, reaching 69-69.5 million with a teledensity of 82 per cent.
In North-East, it is is expected to grow at 1 per cent to 1.5 per cent, reaching 13.2-13.5 million customers with a teledensity of 81-82 per cent.
Further, the gross revenue of the Rajasthan circle was Rs 12,760 crore in FY23, and is expected to reach Rs 18,300 - 18,500 crore by FY28, while the gross revenue of the North-East circle was Rs 2,960 crore in FY23, and is expected to reach Rs 3,900 - 4,100 crore.
Ashika Research | Not rated
On the higher price band, BHL demands price to earnings (P/E) multiple of 75.9x based on 9MFY24 post issue fully diluted EPS, and EV/Ebitda of 10.5x based on 9MFY24 post issue fully diluted Ebitda.
The company's listed peers, according to the Red Herring Prospectus (RHP), have P/E as follows: Bharti Airtel Ltd. (P/E of 82.16x), Vodafone Idea Ltd. (P/E of (1.63x), and Reliance Jio Infocomm Ltd. (not available).
The company's listed peers, according to the Red Herring Prospectus (RHP), have P/E as follows: Bharti Airtel Ltd. (P/E of 82.16x), Vodafone Idea Ltd. (P/E of (1.63x), and Reliance Jio Infocomm Ltd. (not available).
Choice Equity Broking | Subscribe
The operating and financial performance of the firm, as per the brokerage, is expected to improve in the medium-term, despite the ongoing capital expenditure requirements, and rising spectrum costs.
Way2Wealth Brokers | Subscribe
Based on 9MFY24 earnings, the issue appears fully priced. It enjoys virtual leadership in the telecom circles it is operating and is confident of maintaining the lead. Investors can 'SUBSCRIBE' from medium to long term perspective.
