JM Financial initiates coverage on Bharti Hexacom shares at Rs.790 ahead of listing, sees 38-39% upside
Ahead of Bharti Hexacomm Ltd listing, the Brokerage JM Financial has initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs.790 that shows a 38-39% upside over the price of the IPO issue.
On 3rd April 2023, the IPO opened for subscription and closed on 5th April 2023. Currently, the grey market premium of Bharti Hexacom stands at Rs.120 per share which suggests a 22% listing pop to the investors above its issue price of Rs.570 per share. In the last trading session, the premium stood at Rs.95-100 in the unofficial market,
JM Financial said in a report, “We initiated buy rating and increased targeted price on the basis of 10x FY26 EV/EBITDA in line with the anticipated valuation of Bharti’s India wireless business at CMP, sees 38-39% upside. While BHL has a 2-3% greater chance for EBITDA growth, we have utilized a 10x multiple to account for potential concentration risk given BHL’s total reliance on the Rajasthan and NE circles as well as the wireless industry.”
In 3-4 years, the stock could be double based on an EBITDA compounding story of 15-17%.
In Bharti Hexacom Ltd (BHL), Bharti Airtel holds a 70% stake. Stakes of TCIL were reduced to 15% and only 15% were owned by public investors post-IPO. Under the Airtel brand, broadband services, fixed-line and mobile are provided by BHL in Rajasthan and North East.
With a 52.7% revenue share, the BHL leads the North East market and secured 2nd rank in Rajasthan with a 40.4% share.
BHL provides services to more than 27 million wireless subscribers in these two circles. 97-98% of wireless business constitutes BHL’s revenue while the remaining revenue comes from broadband business.
