IPO: Bharti Hexacom

Bharti Hexacom (a Bharti Airtel subsidiary) is a mobile, fixed-line telephone, and broadband services provider that has launched its IPO (initial public offering). Here's a breakdown of the company's strengths, weaknesses, and growth prospects to help investors make an informed decision. In a nutshell Quality : Its three-year average return on equity (ROE) and return on capital employed (ROCE) are 2.1 and 4.4 per cent, respectively. Moreover, it has also generated positive cash flows in the last three financial years. Growth : The company increased its revenue by 19.6 per cent annually during FY21-FY23 due to higher mobile service usage, resulting in an annual increase of 17.1 per cent in the ARPU (average revenue per user) of mobile services. Valuation : The stock is valued at a P/E and P/B of 58.9 and 7.2 times, respectively. Overview : The company is poised to capitalise on the growing demand for connectivity in the country. The adoption of 5G technology would further act as a growth catalyst. Although it has a strong presence, it does face intense competition from Reliance Jio. Besides, a high debt position is something to be monitored. About Bharti Hexacom Bharti Hexacom, a subsidiary of Bharti Airtel, offers telecom and broadband services in Rajasthan and the northeast region of India. It primarily has two business segments: Mobile services (pre-paid, post-paid and data services) - contributed 98 per cent of revenue in FY23. Home and office services (telephone and broadband services) - contributed 2 per cent of revenue in FY23. Strengths of Bharti Hexacom Enjoys strong brand recognition through its flagship brand, Airtel. Its revenue market share in the northeast region is around 53 per cent, higher than Jio's share of 43 per cent as of 9MFY24. Weaknesses of Bharti Hexacom Faces strong competition from Reliance Jio . Operates in a highly capital-intensive and regulated industry. IPO details Total IPO size (Rs cr) 4,275 Offer for sale (Rs cr) 4,275 Fresh issue (Rs cr) - Price band (Rs) 542-570 Subscription dates April 03-05, 2024 Purpose of issue Offer for sale Post-IPO M-cap (Rs cr) 28,500 Net worth (Rs cr) 4,416 Promoter holding (%) 70 Price/earnings ratio (P/E) 58.9 Price/book ratio (P/B) 7.2 Financial history Key financials 2Y growth (% pa) TTM Dec 2023 FY23 FY22 FY21 Revenue (Rs cr) 19.6 6,953 6,579 5,405 4,602 EBIT (Rs cr) 170.1 1,579 1,232 373