Bharti Hexacom gains 8% as Jefferies predicts that the stock will almost double from its IPO price

A robust growth outlook and healthy margin expansion were cited by global brokerage firm Jefferies in initiating coverage on the stock with a “Buy” rating and a price target of Rs 1,080. This led to a Tuesday surge of more than 8% in shares of Bharti Hexacom, a wholly-owned subsidiary of telecom giant Bharti Airtel.

The share increased by about 9% as a result of the optimistic remarks. Bharti Hexacom was trading on the NSE at Rs 869.85 at 9:44 a.m.

If investors in the Bharti Hexacom IPO stick with the counter for a year, they may almost double their money from the issue price of Rs 570, according to Jefferies’ target price.

Jefferies believes that Bharti Hexacom is a good investment opportunity in the Indian telecommunications industry. According to the brokerage, it enables investors to profit from the areas of Bharti Airtel’s company that are expanding more quickly, have greater returns on capital employed (RoCE), and have superior free cash flow (FCF) conversion rates.

From FY24 to FY27, the international brokerage projects a compound annual growth rate in sales of 16% and a CAGR in EBITDA of 21%. It is anticipated that this expansion would result in a 40% CAGR in FCF when combined with a decrease in capital expenditure. stated Jefferies.

Additionally, it anticipates that Bharti Hexacom’s strong cash flow would help reduce debt by Rs 5,500 crore, or 14% of market capitalization, and will help bring down the ratio of net debt to EBITDA to 0.4 times by FY27, which might result in higher dividend payments.

Bharti Hexacom is a communications solutions provider that serves customers in Rajasthan and the North East telecommunication circles in India, which include the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura. It also provides fixed-line telephone and broadband services.

We are able to provide consumers with 5G + services since the firm has a spectrum portfolio that includes a diverse pool of mid-band spectrum.

Bharti Airtel, a telecom corporation led by Sunil Mittal, owns 35 crore shares, or 70% of the business.

On April 12 of this month, Bharti Hexacom’s shares had their market debut at a price that was 32% higher than their issue price of Rs 570. On the NSE on Monday, the stock ended the day 0.74 percent down at Rs 807.30 a share.