Bharti Hexacom IPO: Opportunities in Telecom Services

Bharti Hexacom, a subsidiary of Bharti Airtel, is making waves in the Indian telecom industry. As the company gears up for its Initial Public Offering (IPO), let’s drive into the details.

IPO Details

• Issue Size: Bharti Hexacom aims to raise ₹4,275 crores through its book-built IPO.
• Offer for Sale: The entire issue consists of 7.5 crore shares offered for sale.
• Subscription Dates: The subscription window opened on April 3, 2024, and will close on April 5, 2024.
• Price Band: The price band for each share is set at ₹542 to ₹570.
• Minimum Lot Size: Retail investors can apply for a minimum of 26 shares.
• Listing Date: Tentatively scheduled for April 12, 2024, on both BSE and NSE.

Promoter Details

• Bharti Hexacom is a subsidiary of Bharti Airtel, one of India’s leading telecom giants.
• The promoters have a strong track record in the industry, backed by their established brand and market presence

Products & Service

Bharti Hexacom focuses on communication services in Rajasthan and northeastern states. Their offerings include:

1. Mobile Services: Providing seamless connectivity to millions of subscribers.
2. Data Services: Enabling high-speed internet access and data solutions.
3. Value-Added Services: Offering innovative services to enhance user experience.

Current GMP (Grey Market Premium)

Bharti Hexacom IPO last GMP is ₹60, last updated Apr 5th 2024. Hexacom IPO’s estimated listing price is ₹650.

Competitors

Bharti Hexacom operates in a competitive landscape alongside other telecom players like Bharti Airtel, Reliance Jio, and Vodafone Idea. 

What is the financial performance of Bharti Hexacom?

1. Revenue: The company’s total income, including other sources, stood at ₹54,940 million compared to ₹47,043 million in the previous year.
2. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Bharti Hexacom achieved an EBITDA of ₹19,028 million, a significant increase from ₹11,544 million in the previous year.
3. Profit Before Tax: The profit before tax amounted to ₹18,411 million, a remarkable turnaround from a loss of ₹9,891 million in the previous year.
4. Tax Expenses: The company incurred tax expenses (current tax and deferred tax) of ₹1,665 million.
5. Net Profit: After accounting for taxes, Bharti Hexacom reported a net profit of ₹16,746 million for the fiscal year.

How has their revenue grown over the past few years?

How has their revenue grown over the past few years?

1. FY 2020-21: In the fiscal year 2020-21, the company’s revenue stood at ₹47,043 million.
2. FY 2021-22: During the financial year 2021-22, Bharti Hexacom experienced positive growth, with its revenue increasing to ₹54,940 million. This growth was primarily attributed to an increase in overall revenue.
3. FY 2022-23: On a standalone basis, in fiscal 2023, the company’s operating revenue grew by approximately 21.7% compared to the previous year. Over the period from fiscal 2020 to 2023, the company’s revenues grew at a CAGR of ~19%.
4. H1 2023: In the six months ending September 2023, the Average Revenue Per User (ARPU) improved from ₹135 in FY21 to ₹195.

What are the key drivers of their revenue growth?

What are the key drivers of their revenue growth?

Strong Mobile Business in India and Africa:

• Bharti Hexacom’s consolidated revenue and EBITDA have grown at a CAGR of approximately 17% and 24%, respectively, from fiscal years 2020 to 2023.

Increased Teledensity and Internet Penetration:

• Projections indicate a promising 6-7% CAGR in revenue from fiscal years 2023 to 2028.

Potential ARPU Escalation:

• Between fiscal years 2023 and 2028, the telecom industry is expected to achieve a CAGR of 8.5-9.5%.

What are their growth plans for the next few years?

What are their growth plans for the next few years?

1. Market Presence:
   • Bharti Hexacom operates in two key markets: Rajasthan and the North East telecommunication circles in India (including states like Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura).
   • The company holds telecommunication licenses and spectrum in these circles, positioning it strategically.
2. Revenue Growth:
   • Over the past few years, Bharti Hexacom’s revenues from operations have grown at a CAGR of 12.65%, reaching ₹6,579.0 crore in FY23.
3. Profit Turnaround:
   • Bharti Hexacom reported a net profit of ₹549.2 crore in FY23, a remarkable shift from a loss of ₹1,033.9 crore in FY21.
   • This positive trend reflects the company’s operational efficiency and strategic decisions.
4. Customer Base and Service Offerings:
   • Bharti Hexacom serves approximately 27.1 million customers across both circles.

What are their investment plans for network infrastructure?

What are their investment plans for network infrastructure?

Bharti Hexacom, a subsidiary of Bharti Airtel, has consistently invested in network expansion, technology advancement, and judicious spectrum acquisitions. As of December 31, 2023, the company had allocated a substantial amount for capital expenditure in its future-ready digital infrastructure, totaling ₹206 billion.

These investments are crucial for maintaining and enhancing network quality,coverage, and capacity. 

Financial Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Please consult a qualified financial advisor before making any investment decisions. The author and publisher are not responsible for any losses incurred as a result of using the information provided herein.