Shares of Bharti Hexacom Ltd. declined over 4% on Friday, June 6, after the company's shares were downgraded to 'Neutral' from 'Buy' by brokerage firm Motilal Oswal. The brokerage, however, kept its price target unchanged at ₹1,900.
Bharti Hexacom will be lower than its post-listing high of ₹1,938, from where it has corrected 7%.
Motilal Oswal said that since it began covering Bharti Hexacom in March 2025, the stock has delivered returns of over 40%, compared to around 15% for Bharti Airtel. However, the brokerage now believes that Bharti Hexacom's valuation premium of 40% is steep, and the risk-reward profile is no longer attractive.
According to the brokerage, Bharti Hexacom offers pure-play exposure to Bharti Airtel's fast-growing India wireless and home broadband businesses. It also has slightly better growth prospects, a higher Return on Capital Employed (RoCE), and fewer concerns around inefficient capital allocation.
Now, Bharti Hexacom is trading at 19 times its estimated Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortisation (EV/EBITDA) for the next year, a 37% premium to the implied EV/EBITDA multiple of Bharti Airtel's India business, compared to the 15% average premium since Bharti Hexacom's listing.
In its valuation scenarios, Motilal sees Bharti Hexacom shares reaching ₹2,080 in a bull case and ₹1,400 in a bear case.
The brokerage continues to prefer Bharti Airtel and Reliance Jio (RJio) within the telecom sector.
Motilal expects Bharti Hexacom’s net debt (excluding leases) to be zero by FY27, and forecasts a rise in dividends from ₹10 per share in FY25 to ₹30 per share by FY27. ARPU (Average Revenue Per User) is projected to increase to ₹284 by FY27, up from ₹242 in FY25, following an expected tariff hike in December 2025.
Post FY28, Motilal Oswal expects a 5.5% CAGR in ARPU, with moderated revenue and EBITDA growth at around 7%. However, the upside in valuation depends on a sharper ARPU trajectory.
Out of the 12 analysts that have coverage on Bharti Hexacom, seven of them have a 'Buy' rating, four say 'Hold', while one analyst has a 'Sell' rating on the stock.
Shares of Bharti Hexacom are trading 3.69% lower at ₹1,810.30. The stock has tripled from its IPO price of ₹575 and has risen 22% so far in 202.
Bharti Hexacom will be lower than its post-listing high of ₹1,938, from where it has corrected 7%.
Motilal Oswal said that since it began covering Bharti Hexacom in March 2025, the stock has delivered returns of over 40%, compared to around 15% for Bharti Airtel. However, the brokerage now believes that Bharti Hexacom's valuation premium of 40% is steep, and the risk-reward profile is no longer attractive.
According to the brokerage, Bharti Hexacom offers pure-play exposure to Bharti Airtel's fast-growing India wireless and home broadband businesses. It also has slightly better growth prospects, a higher Return on Capital Employed (RoCE), and fewer concerns around inefficient capital allocation.
Now, Bharti Hexacom is trading at 19 times its estimated Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortisation (EV/EBITDA) for the next year, a 37% premium to the implied EV/EBITDA multiple of Bharti Airtel's India business, compared to the 15% average premium since Bharti Hexacom's listing.
In its valuation scenarios, Motilal sees Bharti Hexacom shares reaching ₹2,080 in a bull case and ₹1,400 in a bear case.
The brokerage continues to prefer Bharti Airtel and Reliance Jio (RJio) within the telecom sector.
Motilal expects Bharti Hexacom’s net debt (excluding leases) to be zero by FY27, and forecasts a rise in dividends from ₹10 per share in FY25 to ₹30 per share by FY27. ARPU (Average Revenue Per User) is projected to increase to ₹284 by FY27, up from ₹242 in FY25, following an expected tariff hike in December 2025.
Post FY28, Motilal Oswal expects a 5.5% CAGR in ARPU, with moderated revenue and EBITDA growth at around 7%. However, the upside in valuation depends on a sharper ARPU trajectory.
Out of the 12 analysts that have coverage on Bharti Hexacom, seven of them have a 'Buy' rating, four say 'Hold', while one analyst has a 'Sell' rating on the stock.
Shares of Bharti Hexacom are trading 3.69% lower at ₹1,810.30. The stock has tripled from its IPO price of ₹575 and has risen 22% so far in 202.
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