Bharti Hexacom IPO Review 2024

Bharti Hexacom IPO Review 2024: Bharti Hexacom is coming up with its IPO issue of Rs. 4,275 Cr which will open on 3rd April 2024. The issue will close on 5th April and be listed on the exchange on 12th April 2024. This article will analyze the Financials, GMP, strengths and weaknesses of the Bharti Hexacom Limited IPO Review 2024. Keep reading to find out!

Bharti Hexacom IPO Review – Company Overview

Let’s see the company overview of Bharti Hexacom IPO Review in detail. Bharti Hexacom is a communications service provider offering consumer mobile services, fixed-line telephone & broadband services under the brand Airtel. The Company is in the Northeastern states of Arunachal Pradesh, Mizoram, Manipur, Nagaland, Meghalaya, and Tripura.

Established in 1995, the Company was originally incorporated as Hexacom India Ltd. In 2004, it was acquired by Bharti Airtel and renamed Bharti Hexacom Ltd. As of this RHP filing, Bharti Airtel owns 70% of the Company. The remaining 30% is owned by the Government of India through Telecommunications Consultants India Ltd. (TCIL).

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It is an engineering & Consultancy Company providing expertise in the fields of telecom & IT to developing countries across the globe. Today, Bharti Hexacom offers its communication services as Airtel in a synergistic manner to its customers. Such services include enhanced customer engagement and customized family plans as part of the Airtel Black proposition. 

The Company operates a robust network infrastructure which is a mix of owned & leased assets. As of December 31, 2023, the Company operates 24,874 network towers out of which 5092 are owned. It also has a spectrum portfolio of mid-band spectrum architecture of (1800/2100/2300 MHz bands)

These towers are constructed on a non-standalone basis, which allows the same architecture to be used for both 4G as well as 5G. This allows for a lower cost of ownership and faster roll-out of the infrastructure across the country.

Industry Overview

The other part of Bharti Hexacom IPO Review is an industry overview in which Rapid digital transformation has been fundamentally reshaping the Indian economy. At the crux of this advancement is the Digital India initiative launched by the government in July 2015 to transform the country into a knowledge-based economy and a digitally empowered society. 

Fast and dependable mobile communication networks are helping the government achieve Digital India’s targets. Technological upgrades such as the Unified Payment Interface (UPI) and incorporated several e-governance services in government-to-business (G2B) and government-to-citizen (G2C) applications, leading to citizen empowerment.  

The rise in UPI transactions can be attributed to the platform’s seamless integration with diverse banking systems and compatibility with numerous third-party apps. Its open architecture empowers developers to craft innovative solutions, fostering a robust ecosystem of UPI-enabled apps 

The telecom industry is capital-intensive and highly competitive. Players undertake mergers and acquisitions (M&As) to not only survive but also upgrade technologically, expand the customer base and widen product diversification. Acquisitions in the sector primarily involve horizontal integration as the companies gain market share by acquiring competitors.

Fewer market players lead to economies of scale and a reduction in the overlapping infrastructure. This lowers operational expenses and allows more efficient use of capital investments. In most key countries, 2-5 telecom companies dominate the sector. 

Global mobile traffic per customer increased from 0.6 GB/customer/month in 2013 to 21.0 GB/customer/month in 2023, logging 35x growth in data consumption. Factors driving data traffic growth in mobile networks includes ever-increasing demand for online digital services, 4G/5G deployment across telecom markets, and increased network capacity.

Bharti Hexacom IPO Review – Financials

Moving to the financials of Bharti Hexacom IPO Review we see that Bharti Hexacom reported a gross revenue of Rs. 6,579 Cr in FY23, which increased by 22% from Rs. 5,405 Cr in FY22. The Company has consistently scaled revenue at the rate of 19.6% CAGR since FY21.

In terms of Profitability, the Company reported a 67% drop in earnings from Rs. 1675 Cr in FY22 to Rs. 549 Cr in FY23. This massive fall in earnings was a result of an exceptional gain of Rs. 1951 Cr in FY22. The lack of such earnings in FY23 resulted in a drop in the earnings rate.

The Company was a loss maker back in FY21 due to higher operating costs and exceptional losses. This shows that although revenues were consistent in the past 3 years, earnings have not followed through.

Bharti Hexacom IPO Review – Key Players 

Now we will look into the key players of Bharti Hexacom IPO Review including parent Company Bharti Airtel, Bharti Hexacom has 3 peers, two of whom are listed. Reliance Jio Infocomm is listed indirectly with its parent Reliance Industries on the exchanges.

Bharti Airtel is the largest telecom Company in the space by revenue earning as much as 1.4 Lakh Cr. Vodafone Idea continues to struggle as a loss maker while Jio earns about Rs. 4 per its unlisted shares.

As the industry maintains a near duopoly (with struggling Idea) Bharti Airtel trades at a premium of 82x, with a Return on Net Worth of 15.8%. Bharti Hexacom, priced at the higher end of Rs. 570, with a basic EPS of Rs. 10.98, will be valued at a Price-to-Earnings ratio of 51.91x.

Bharti Hexacom IPO Review - Key playersBharti Hexacom IPO Review - Key players
Source: RHP of the Company

Bharti Hexacom IPO Review – Strengths And Weakness


  1. Established Leadership & large Customer Base: Hexacom has a strong market presence in Rajasthan and other North-Eastern states of India. As of December 31, 2023, the Company is present in 486 census towns with an aggregate of 2.7 Cr customers.
  2. Presence in High Growth Potential Markets: Rajasthan & North Eastern India, have a teledensity of just 79.5% & 79.7% respectively. Teledensity in the rural areas of Rajasthan is as low as 57%. This provides a huge opportunity for the Company to further strengthen its connectivity in these areas.
  3. Strong Parentage & established Brand Presence: The parent company, Airtel is a global communications provider with 50 Cr customers across 17 countries in South Asia & Africa. This provides a strong brand image for Bharti Hexacom in its business operation along with guidance from its parent company.
  4. Building a future-ready Network: As of December 31, 2023, Airtel has 9 Lakh mobile base stations. It has submarine cables and fiber connectivity across the country. Due to this solid infrastructure, customers of Airtel spent 2.6 Lakh minutes and consumed 3.7 billion gigabytes of data during the year.
  5. Extensive distribution & service Network: In the Rajasthan and North Eastern divisions the Company has 616 distributors and 75 stores. These partners sell Airtel products & services via the “Mitra App”. Consumers in this region can take the might of the seamlessly connected services offered by Airtel across India.


  1. Geographical Concentration Risk: The Company derives all its revenues from the sale of its services in the Rajasthan & North Eastern regions of India. The business can be significantly impacted in case of any unfavorable developments in the respective markets.
  2. Inconsistent Earnings: Although Hexacom’s revenue has scaled consistently, the same cannot be said about its earnings. Both FY21 & FY22 saw exceptional gains/losses that distorted numbers from normalized earnings.
  3. Failure to comply with SEBI regulations: As the Company reported losses in FY21, it failed to comply with SEBI’s Issue of Capital and Disclosure requirements norms.
  4. Regulatory Concerns with Pricing: Telecom prices in India are subject to regulations in the form of floor pricing or price ceiling. A reduction in price ceiling can significantly drop the Company’s ARPU and drop earnings
  5. High Debt Concerns: As of December 31, 2023, total outstanding debt stood around Rs. 3772 Cr. The debt-to-equity ratio of the Company is quite high at 1.48x as of FY23 and 1.41x as of December 31, 2023.

Bharti Hexacom IPO Review – GMP

The shares of Bharti Hexacom Ltd traded at a 6.14% premium in the grey market on 26th March 2024. The shares in Grey Market traded at Rs 605. This gives it a premium of Rs 35 per share over the cap price of Rs 570.

Bharti Hexacom IPO Review – Key IPO Information

Promoters: Bharti Airtel Ltd

Book Running Lead Manager: SBI Capital Markets Ltd, Axis Capital Ltd, BOB Capital Markets Ltd, ICICI Securities Ltd, and IIFL Securities Ltd

Registrar to the Offer: KFin Technologies Ltd

The Objective of the Issue

  1. The entire issue will be an Offer for Sale which will allow promoters to exit their stake at a profitable valuation


In conclusion, the Bharti Hexacom IPO Review presents a mixed bag of opportunities and challenges for potential investors. On the positive side, the company has a strong parentage with Bharti Airtel, an established brand presence. Hexacom also has a large customer base in its operational regions of Rajasthan and North-Eastern India. 

Additionally, these regions offer high growth potential with relatively low teledensity, providing ample room for expansion. Furthermore, Bharti Hexacom is building a future-ready network infrastructure, leveraging its parent company’s extensive resources.

However, the company faces several weaknesses and risks that cannot be overlooked. The geographical concentration of its operations exposes it to regional market dynamics. Its earnings have been rather inconsistent, with exceptional gains and losses distorting the financials in recent years. 

Moreover, the company has previously failed to comply with SEBI regulations by reporting losses in FY21. Debt levels also remain quite high currently, although these have consistently reduced since FY21.

Investors should carefully evaluate these strengths and weaknesses, as well as the company’s valuation and growth prospects, before making an informed decision regarding participation in the Bharti Hexacom IPO.

Written by Nasir Hussain

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