IGI Logo

BACKGROUND

Incorporated in 1995, Bharti Hexacom Ltd (BHL) provides mobile services, fixed-line and broadband services to customers in Rajasthan and North East (NE) circles in India, wherein it enjoys a prominent market share. BHL offers its services under ‘Airtel’ brand and provides a gamut of digital services in customized plans which has resulted in the continuous improvement in market share during the last three fiscals. Company has 27.1 million customers across both the circles and relies on a robust network infrastructure with a mix of owned and leased assets. The GoI through Telecommunications Consultants India Limited (“TCIL”) owns 30% in the company, part of which is offered through the current IPO.

Objects and Details of the Issue:

Total issue size is of Rs. 4275 Cr and it is entirely an OFS of 7.5 cr shares.

* To carry out the Offer for Sale of up to 75,000,000 Equity Shares by the Selling Shareholder.

* Achieve the benefits of listing the Equity Shares on the Stock Exchanges.

Investment Rationale:

* Strong Parentage and Established ‘Airtel’ brand will continue to offer synergies.

* Prominent Market share in the areas of operations and BHL’s rural penetration aim with customized services to aid growth.

* Steady improvement in revenues.

Valuation and Recommendation:-

BHL has established prominent position in Rajasthan and is a market leader in North East Circles. The company has successfully improved its ARPU from Rs. 135 in FY21 to Rs.197 in 9MFY24. On the upper price band, the stock is available at 10.5x EV/EBIDTA its annualised 9MFY24 earnings which is lower than industry. We believe BHL is rightly placed to tap the growing demand for data consumption in the country on the back of the vast parental fiber connectivity and submarine cable investments. With improving teledensity and continuous synergies unlocking, we believe BHL will continue to maintain its prominence in its areas of operation and recommend ‘Subscribe’ to the IPO with long term view.

Please refer disclaimer at https://www.nirmalbang.com/disclaimer.aspx
SEBI Registration number is INH000001766