The initial public offering (IPO) of Bharti Hexacom made a stellar debut on the stock exchanges on Friday, in an otherwise weak broader market. The shares of Bharti Hexacom, a subsidiary of telecom major Bharti Airtel, listed at ₹755, a premium of 32.45% over the IPO price of ₹570 apiece. On the BSE, the stock opened at ₹755.2, up 32.5% over the issue price. On the other hand, the BSE Sensex opened 148 points lower at 74,889, and the Nifty50 belled the day at 22,677, down 76 points from the previous closing level.
Post listing, Bharti Hexacom shares surged as much as 35% to hit a high of ₹769 on the NSE, while it touched a high of ₹768.95 on the BSE. The market capitalisation of the company rose to ₹38,142.5 crore.
The debut of Bharti Hexacom was better than Street expectations as the stock was commanding a grey market premium (GMP) of ₹125 apiece in the unofficial market, signaling the listing to be around ₹695 per share, up 21.9% over the issue price.
“Bharti Hexacom defied pre-listing predictions of a modest debut and delivered a strong performance on the stock exchanges. This impressive listing surpasses pre-listing expectations, which were tempered by concerns about the company's financial performance and valuation,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.
“While the listing exceeded expectations, the pre-identified risks remain relevant. Existing investors may consider holding their shares, while new investors should closely monitor the company's performance and market conditions before making a fresh entry,” Nyati adds.
Mehta Equities, in its pre-listing view, said that Bharti Hexacom IPO gave investors an opportunity to invest in a subsidiary within the Airtel group, which plays a pivotal role in delivering communication solutions, particularly in the North-East regions of India. “We think with the leadership in mobile, fixed-line telephone, and broadband services, along with strategic investments in network infrastructure, the company is poised for continued growth. We also believe the company’s projected customer base expansion, increased tele density, and a strong sales and distribution network further bolster its prospects,” says Rajan Shinde, research analyst at Mehta Equities.
The Delhi-based Bharti Hexacom raised ₹4,275 crore via IPO, at a total market value of ₹28,500 crore, received a good response from investors, with the issue subscribing by 29.88 times. The public issue of the telecom company, which was entirely an issue of an offer for sale (OFS) of 7.5 crore shares by its only public shareholder, Telecommunications Consultants India, was offered at a price band of ₹542-570 per share per share and lot size of 26 shares and in multiple thereafter.
Segment wise, the issue was subscribed 2.83 times in the retail category, while the portion set aside for qualified institutional buyers (QIB) and non-institutional investors (NII) received 48.57 times and 10.52 times bids, respectively. The company had reserved 75% of the issue size for QIBs, 15% for NIIs, and the remaining 10% for retail investors.
Ahead of the IPO, the company raised ₹1,923.75 crore from anchor investors by allocating 3.37 crore shares at the upper end of the price band of ₹570 per share.
Incorporated on April 20, 1995, Bharti Hexacom is the largest mobile telephony services in Rajasthan and North Eastern circles in India, which comprises the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. The company, which offers its services under the brand ‘Airtel’, also provides fixed line and broadband services in Rajasthan. As of September 30, 2023, Bharti Hexacom had invested ₹20,300 crore in capital expenditure in its future ready digital infrastructure.
On the financial front, the telecom firm ended the financial year 2022-23 with a net profit of ₹549 crore, down 67.2% compared to the previous year, while revenue from operations rose 21.7% to ₹6,579 crore in FY23. For the six-month ended September FY24, net profit fell 64.6% year-on-year to ₹69 crore, dented by higher tax costs and exceptional loss, but revenue increased 8% YoY to ₹3,420 crore.
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