Shares of Bharti Hexacom, a subsidiary of Bharti Airtel, rallied over 8% today (April 16) after global brokerage firm Jefferies initiated coverage on the stock with a ‘Buy’ rating and put a price target of ₹1,080. Citing strong growth outlook and healthy margin expansion, Jefferies put the price target on Bharti Hexacom which is the highest on the street. It implies a potential upside of 34% from the stock’s closing levels on April 15.
Bharti Hexacom is a communications solutions provider which offers services in Rajasthan and the North East telecommunication circles.
Shares of Bharti Hexacom debuted on the bourses on April 12 at a 32% premium to its issue price of ₹570. The stock closed at ₹807.30 apiece on the NSE on April 15.
As per Jefferies, Bharti Hexacom is the best play on Indian telecom as the foreign brokerage expects a 16% revenue CAGR (compound annual growth rate) between financial year 2024 – 2027 and 21% EBITDA CAGR over FY24-27. It said tha the CAGR in revenue and EBITDA which coupled with moderation in capex would result in 40% CAGR in FCF. Bharti Hexacom’s strong cash generation should drive deleveraging of ₹5,500 crore (14% of market capitalization) and help reduce net debt to EBITDA ratio to 0.4 times by FY27, it added.
JM Financial initiated coverage on Bharti Hexacom ahead of its stock market debut and assigned a ‘Buy’ rating with a price target of ₹790 per share. Bharti Hexacom Ltd is a midcap pure-play on structural wireless ARPU growth story, it said.
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