Since Bharati Hexacom, a Bharti Group firm, has excellent margin expansion and strong growth potential, Brokerage Jefferies is positive on the freshly listed company.
Jefferies began covering the stock with a price objective of Rs 1,080 and a "buy" rating. With a near 34 percent upside in the counter, the price target is the most aggressive on the Street.
The share increased by about 9% as a result of the optimistic remarks. Bharti Hexacom was trading on the NSE at Rs 869.85 at 9:44 a.m.
If investors in the Bharti Hexacom IPO stick with the counter for a year, they may nearly double their money from the issue price of Rs 570, according to Jefferies' target price.
Jefferies believes that Bharti Hexacom is a good investment opportunity in the Indian telecommunications industry. According to the brokerage, it enables investors to profit from the areas of Bharti Airtel's company that are expanding more quickly, have better free cash flow (FCF) conversion rates, and greater returns on capital employed (RoCE).
From FY24 to FY27, the international brokerage projects a compound annual growth rate in revenue of 16 percent and a CAGR in EBITDA of 21 percent. It is anticipated that this expansion will result in a 40 percent CAGR in FCF when combined with a decrease in capital expenditure. stated Jefferies.
Additionally, it anticipates that Bharti Hexacom's strong cash flow would help reduce debt by Rs 5,500 crore, or 14% of market capitalization, and will help bring down the net debt to EBITDA ratio to 0.4 times by FY27, which might result in higher dividend payments.
Prior to the company's market launch, JM Financial had also begun covering Bharti Hexacom, recommending a "buy" and setting a price objective of Rs 790. Based on the structural growth narrative of cellular ARPU (average revenue per user) in the Indian telecom market, JM Financial views Bharti Hexacom as a midcap business.
