Bharti Hexacom Limited is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India, which comprises the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. They offer the services under the brand ‘Airtel’. They continuously invest in network expansion, technology advancement and judicious spectrum investments. As of December 31, 2023, they had invested Rs 206 billion in capital expenditure in the future ready digital infrastructure. They also derive significant synergies from the relationship with the Promoter, Airtel, through the expansive digital infrastructure, digital experience and the digital services it provides to its customers. The revenue market share for the Rajasthan circle was 40.4%, 39.2%, 39.5%, 36.7% and 32.7%, while for the North East circle was 52.7%, 52.4%, 52.5%, 48.5% and 42.0% during the nine months ended December 31, 2023 and 2022 and Fiscals 2023, 2022 and 2021, respectively. They were at number one position in the North East circle during the nine months ended December 31, 2023 and Fiscals 2023 and 2022. In the Rajasthan circle, the market share gap between them and the market leader has narrowed between Fiscal 2021 and the nine months ended December 31, 2023 and they stood at the close second position during the nine months ended December 31, 2023. They have been able to consistently increase the ARPU for mobile services from Rs 135 for Fiscal 2021 to Rs 155 for Fiscal 2022 to Rs 185 for Fiscal 2023 to Rs 197 for the nine months ended December 31, 2023. As of December 31, 2023, they were present in 486 census towns and had an aggregate of 27.1 million customers across both the circles. The customer market share has grown consistently in Rajasthan from 33.1% as of March 31, 2021 to 35.0% as of December 31, 2023 and in the North East from 43.6% to 49.8% between the same dates. They have the highest number of Visitor Location Register (“VLR”) customers (6.4 million) and a VLR market share of 52.3% in the North East circle and the second highest in the Rajasthan circle with 23.2 million customers and a VLR market share of 38.7%, as of December 31, 2023. As of the same date, the customer base included 19,144 thousand data customers, of which 18,839 thousand were 4G and 5G customers, and data consumption per customer per month stood at approximately 23.1 GB during the nine months ended December 31, 2023. They rely on a robust network infrastructure with a mix of owned and leased assets. As of December 31, 2023, they utilized 24,874 network towers, of which they owned 5,092 towers, and the remaining 19,782 towers were leased from tower companies. They have a spectrum portfolio with varied pool of mid band spectrum (1800/2100/2300 MHz bands), which has enabled them to offer 5G Plus services on the widely chosen non-standalone network architecture and at a low cost of ownership. During the nine months ended December 31, 2023 and 2022 and Fiscals 2023, 2022 and 2021, the capital expenditure was Rs 16,003 million, Rs 25,577 million, Rs 30,518 million, Rs 8,745 million and Rs 15,767 million, or 30.65%, 52.77%, 46.39%, 16.18% and 34.26% of the revenue from operations, respectively. They have an extensive distribution and service network across the regions they operate in and during the nine months ended December 31, 2023 and the last three Fiscals, they have set up 51 retail outlets and 24 small format stores to reach 90 cities, as of December 31, 2023. As of December 31, 2023, the distribution network comprised 616 distributors and 89,454 retail touch points. As per financial performance, Bharti Hexacom Limited has posted total income / net profits of Rs 4,704 Cr / Rs (1,034) Cr (FY21), Rs 5,494 Cr / Rs 1,675 Cr (FY22), Rs 6,719 Cr / Rs 549 Cr (FY23) and Rs 5,421 Cr / Rs 282 Cr (Q3 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 13.21 and average RoNW of 13.46% for last three fiscals. Issue is priced at a P/BV of 6.45 as per NAV of 88.32 as on 31.12.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 17.02, 51.89, 58.92 and 75.85 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, five lead managers are associated with this IPO, and have handled around 191 IPOs in last three fiscals. SBI Capital Markets Limited: This is 26th Main Board IPO from this BRLM. From last 10 Main Board IPOs, four opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, four are trading below issue price and remaining are trading above issue price.( As on 26.03.2024 ) Axis Capital Limited: This is 55th Main Board IPO from this BRLM. From last 10 Main Board IPOs, four opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, four are trading below issue price and remaining are trading above issue price.( As on 26.03.2024 ) BOB Capital Markets Limited: This is 6th Main Board IPO from this BRLM. From last 5 Main Board IPOs, two opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 5 Main Board IPOs, two are trading below issue price and remaining are trading above issue price.( As on 26.03.2024 ) ICICI Securities Limited: This is 64th Main Board IPO from this BRLM. From last 10 Main Board IPOs, four opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, five are trading below issue price and remaining are trading above issue price.( As on 26.03.2024 ) IIFL Securities Limited: This is 45th Main Board IPO from this BRLM. From last 10 Main Board IPOs, three opened below issue price and remaining opened above or at par issue price on the day of listing. As of now, from last 10 Main Board IPOs, two are trading below issue price and remaining are trading above issue price.( As on 26.03.2024) As per financials, Bharti Hexacom Limited has shown good growth, RoNW is 13.83% and P/E is respectively 17.02, 51.89, 58.92 and 75.85 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks fully priced compared to peers. Company is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services. The growth of the sector will be average. Performance of BRLMS are good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment