Bharti Hexacom Hits Record High with 7% Surge Following Jefferies Upgrade to 'Buy'

Shares of Bharti Hexacom got off to a strong start on September 13, climbing over 7% and hitting a fresh high of ₹1,383 after Jefferies upgraded its rating to 'buy' and set a new price target of ₹1,600 per share.

By around 9:20 AM IST, the stock was trading at ₹1,365, marking a 5.8% rise compared to its previous close on the NSE. Over the last month, Bharti Hexacom's stock has surged nearly 14%.

Jefferies' revised price target reflects a potential 24% upside from its last closing price on the National Stock Exchange. This move comes just three months after the brokerage downgraded the stock to "hold" back in June, citing elevated valuations following its post-IPO rally.

The brokerage firm has now raised its revenue and EBITDA forecasts for FY26 and FY27 by 5-12%. Jefferies pointed out that Bharti Hexacom's compound annual growth rates (CAGR) for EBITDA and free cash flow to equity (FCFE) are expected to be 25% and 66%, respectively, between FY24 and FY27, which outpaces Bharti Airtel's figures. This, they believe, justifies the stock's premium valuation.

Furthermore, Jefferies sees Bharti Hexacom’s valuation premium as sustainable, underpinned by its robust growth projections in EBITDA and FCFE over the next few years, compared to Bharti Airtel.

For the quarter ending June 30, 2024, Bharti Hexacom reported a significant year-on-year net profit increase of 101.90%, amounting to ₹511.2 crore. On a sequential basis, net profit surged by 129.65% from ₹222.6 crore in the prior quarter.

The company’s Average Revenue Per User (ARPU) for mobile services rose to ₹205 in Q1 FY25, up from ₹194 in the same period last year. This improvement was driven by a focus on acquiring higher-quality customers and enhancing its customer base. Additionally, mobile data usage saw a jump of 30.6% year-on-year, with an average consumption of 25.7 GB per customer per month.

Bharti Hexacom's mobile services revenue experienced a 12.9% year-on-year boost, supported by a higher ARPU, growing smartphone adoption, stronger customer additions, and a better service mix.

Notably, all 10 analysts currently covering the stock are recommending a "buy."

Bharti Hexacom is a telecommunications service provider that delivers mobile services, fixed-line telephone, and broadband solutions to customers in the Rajasthan and North East telecom circles of India. These regions include the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura. The company operates under the ‘Airtel’ brand.

Bharti Hexacom is committed to ongoing investments in expanding its network, advancing technology, and making strategic spectrum investments to enhance its services.