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Long runway of strong growth

Bharti Hexacom (BHARTIHE IN), a subsidiary of Bharti Airtel (BHARTI IN, Buy, CMP: 1,819 , TP: INR 2,427), provides wireless and broadband services across Rajasthan and the Northeast – regions that remain structurally underpenetrated but offer high-growth potential. Leveraging Airtel’s brand, superior network quality, and premiumization-led strategy, BHARTIHE has consistently gained revenue market share (1,376bp in Rajasthan and 1,871bp in the Northeast during FY20-25) through deep 4G and 5G coverage, rising smartphone penetration (from 66% in FY23 to 79% in FY26), and strong data consumption trends (24% during FY23-26 & 22% during FY26-29E). With India’s telecom industry evolving into a nearduopoly, we believe the company is well positioned to benefit from sustained ARPU growth, registering a 7% CAGR during FY26-29E, driven by tariff hikes, expanding home broadband penetration (home subscribers to clock in a 33% CAGR during FY26-29E) and long-term digital adoption trends across its operating circles. We initiate on BHARTIHE with a Buy rating with a TP of INR 1,876 based on 15x FY28E EV/EBITDA.

ARPU to clock CAGR of 7% during FY26-29E:

We expect an ARPU CAGR of 7% during FY26– 29E, driven by tariff hikes and sustained premiumization. Limited competition and India’s still-low telecom tariffs provide a strong runway for continued ARPU expansion. BHARTIHE remains focused on high-value customers via premium plans, superior customer mix, and differentiated service offerings. Key ARPU drivers include smartphone upgrades, rising postpaid penetration, enterprise growth, 5G monetization, and convergence-led cross-selling.

Data consumption and 5G driving ARPU growth:

Rising data consumption is a key structural driver of BHARTIHE’s ARPU growth, with per-user data use posting a 29% CAGR during FY21- 26 to ~34 GB/month. We expect a mobile data traffic CAGR of 22% during FY26-30E, supported by rising 5G adoption, wider network rollout, and an expanding digital ecosystem. Home broadband growth via fiber-to-the-home (FTTH) and 5G-led fixed wireless access (FWA) is emerging as a key monetization lever, expanding household wallet share & rising 5G returns

Sustained RMS gains in an underpenetrated duopoly market:

BHARTIHE continues to gain revenue market share, emerging as the market leader in the Northeast and No 2 firm in Rajasthan. Revenue markets share (RMS) gains have been driven by expansion in 4G and 5G coverage area, Vodafone Idea’s weak network investments, and BHARTIHE’s own premiumization-led execution. Both circles remain structurally underpenetrated vs panIndia levels in internet use, teledensity, and postpaid penetration, providing long-term growth runway. Smartphone penetration has converged with pan-India levels, shifting the next phase of ARPU growth toward postpaid migration, 5G monetization, and data upgrades. A near-duopolistic market structure between BHARTIHE and Reliance Jio supports sustained market share gains, tariff discipline, and strong ARPU-led monetization.

Initiate with Buy and TP of INR 1,876:

We expect a top-line CAGR of 11%, an EBITDA CAGR of 14% and a PAT CAGR of 29% during FY26-29E. We initiate on BHARTIHE with a Buy rating with a TP of INR 1,876 based on 15x FY28E EV/EBITDA.

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SEBI Registration number is INH000000933