Bharti Hexacom Rallies On Q4 Earnings; Jefferies Hikes Target Price

Bharti Hexacom stock surged as much as 6 per cent in the Wednesday trading session after brokerage firm Jefferies raised its target price in response to Bharti Airtel arm’s maiden March quarter earnings after its initial public offering (IPO). 

Bharti Hexacom stock traded at Rs 924 with 2.78 per cent gain in the afternoon session on the National Stock Exchange (NSE).

Bharti Hexacom reported its fourth quarter 10.2 per cent growth in its net profit to Rs 222.6 crore year-on-year (YoY). The company attributed this development to its good operating margin performance, robust customer acquisition, and rising average revenue per user (ARPU) for mobile services.

The business's revenue from operations increased 7.8 per cent YoY to Rs 1,868 crore in the quarter. The company provides broadband, fixed-line telephone, and consumer mobile services in Rajasthan and the Northeast regions.

In terms of operations, earnings before interest, tax, depreciation and amortisation (EBITDA) climbed by 14.6 percent to Rs 914 crore during the quarter, while margin expanded by 290 basis points to 48.9 percent as compared to the same period last year.

Jefferies believes that Bharti Hexacom has a compelling growth story. The brokerage claims that the company's ARPUs, incremental EBITDA margins, and higher-than-expected subscriber additions during the March quarter were all good surprises.

It has increased its projections by up to 9 per cent and projects that Bharti Hexacom would expand its sales, EBITDA, and profit at compound annual growth rates (CAGRs) of 17 per cent, 23 per cent, and 77 per cent, respectively, between FY24 and FY27.

Jeffereis kept its "buy" rating on the shares, although it increased the target price from Rs 1,080 to Rs 1,200 per share.

Bharti Hexacom made a bumper debut last month when its IPO listed at a premium of more than 32 per cent over its Rs 570 issue price.