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Bharti Hexacom IPO Listing: Shares of Bharti Hexacom launch at a 32% premium beyond the IPO Price



Bharti Hexacom IPO Listing and Other Details


This year's largest public offering in India was the ₹4,275-crore IPO of Bharti Airtel's subsidiary.


Bharti Hexacom Limited, a subsidiary of Bharti Airtel, is a significant player in the Indian telecommunications sector. The company's journey began in 1995 under the name 'Hexacom India Limited' and was later rebranded to Bharti Hexacom Limited after Bharti Airtel acquired a majority equity interest in 2004.


The company is part of the Bharti Enterprises group, founded by Sunil Bharti Mittal. Under his leadership, Bharti Enterprises has grown into one of India's leading business conglomerates, with interests in telecom, insurance, real estate, education, malls, hospitality, agri-business, and food. Sunil Bharti Mittal's vision and entrepreneurial spirit have been the driving force behind the group's success.


Originally incorporated in Delhi, the national capital territory of India, Bharti Hexacom has expanded its operations significantly. The company provides mobile services, fixed-line telephone, and broadband services, primarily in the Rajasthan and North East regions, covering states like Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura.


The inception of Bharti Hexacom was driven by the need to provide quality telecommunication services in regions that were underserved at the time. The company aimed to bridge the digital divide and enhance connectivity in these areas, fostering growth and development. This mission aligned with the broader vision of Bharti Enterprises to create a transformative impact on society through innovation in telecommunications.


The rationale behind starting Bharti Hexacom was to tap into the potential of the burgeoning telecom market in India, especially in regions that lacked adequate services. By offering reliable and affordable communication solutions, Bharti Hexacom aimed to empower individuals and businesses in these areas, contributing to the overall economic progress of the country.


In contrast to the IPO price of ₹570, shares of Bharti Hexacom are listed with a 32.4% premium at ₹755, above predictions of a 12–15% premium. This was a fantastic debut for the company. The largest public offering in India this year was the ₹4,275-crore IPO of Bharti Airtel's subsidiary.


With qualified institutional investors subscribing 48.57 times their allocation, non-institutional investors purchasing 10.52 times their portion, and retail investors purchasing 2.83 times the reserved portion, the offer boasted strong subscription figures, nearly 30 times its allocated quota.


The shares of Bharti Hexacom were trading at a 25% premium over the issue price on the grey market. Shares are exchanged illegally on the grey market, an unauthorized market. Investors, however, monitor the grey market to get indications about performance.


Today, April 12, 2024, has been scheduled as the listing day for Bharti Hexacom Limited's initial public offering (IPO). According to the BSE notification, the mainboard IPO would list in the "B" group of shares on the BSE and NSE.


Shares of the firm that owns the "Airtel" name will be launched on the BSE and NSE during a special pre-open session on Friday deals, according to information that is currently accessible on the BSE. Thus, on Friday at 10:00 AM, the Bharti Hexacom share price will be open for trading.


Bharti Hexacom Limited


Bharti Hexacom Limited, a prominent player in the Indian telecom sector, has demonstrated a robust financial performance in recent years. For the fiscal year ending March 31, 2022, the company reported a significant increase in revenue, amounting to Rs. 54,940 Million, compared to Rs. 47,043 Million in the previous fiscal year. This revenue growth can be attributed to the company's diversified service offerings, including mobile, voice, and data solutions, which have resonated well with the consumer base in Rajasthan and North East Circles, where it operates as one of the largest mobile service providers.

 

In terms of profit, Bharti Hexacom Limited has also shown remarkable performance. The net profit for the quarter ending December 2023 saw a 39.84% increase to Rs 212.70 crore from Rs 152.10 crore in the corresponding quarter of the previous year. Sales during this quarter rose by 7.21% to Rs 1800.60 crore, up from Rs 1679.50 crore in the previous quarter ended December 2022. These figures indicate a strong upward trajectory in the company's profitability, showcasing its ability to capitalize on market opportunities and maintain growth momentum.

 

Furthermore, the company's full-year revenue for FY23 stood at Rs 6,579 crore, marking a 22% increase on an annual basis. The net profit reported at the end of September 2023 was Rs 69.1 crore, compared with Rs 195.2 crore in the six months ended September 2022. This demonstrates the company's resilience and strategic agility in navigating the dynamic market conditions, including the challenges posed by the COVID-19 pandemic.


As of December 31, 2023, the company has allocated a substantial amount of Rs. 206 billion towards capital expenditure to enhance its future-ready digital infrastructure. This investment underscores the company's commitment to innovation and technological advancement, ensuring it remains at the forefront of the telecommunications industry. The focus on R&D has enabled Bharti Hexacom to expand its network significantly, with over 23,000 towers to its credit, providing robust consumer mobile services, fixed-line telephone, and broadband services across key regions in India. This strategic investment in R&D not only strengthens their service offerings but also aligns with their objective to premium their portfolio, acquire quality customers, and deliver an exceptional omnichannel experience through data science and digital offerings. The synergy with Airtel's expansive digital infrastructure further enhances its capability to offer differentiated and customized services, contributing to a continuous improvement in its revenue market share. Such dedicated investment in R&D is indicative of Bharti Hexacom's long-term vision for growth and sustainability in the competitive telecommunications sector.


Conclusion


In conclusion, the Bharti Hexacom Limited IPO presents a significant event in the telecommunications sector, reflecting the company's growth trajectory and future potential. With a substantial issue size and a strategic price band, the IPO has garnered attention from various investor segments, including QIBs, NIIs, and retail investors. The company's decision to reduce the issue size and the subsequent grey market premium indicate a nuanced market perception. As the IPO date approaches, potential investors are advised to consider the company's financial performance, market position, and the broader economic context. Bharti Hexacom's journey from a regional player to a participant in the national market is a testament to its operational strengths and strategic initiatives. The IPO not only offers an opportunity for the company to raise capital but also allows investors to be part of Bharti Hexacom's evolving story in the Indian telecom landscape.


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Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.


FAQs


Q: What is an IPO? 

An Initial Public Offering (IPO) is the first time a company offers its shares for sale to the public on a stock exchange. This allows the company to raise capital for growth and expansion.


Q: How can I apply for an IPO?

There are two main ways to apply for an IPO:

  1. Retail Investor: You can apply through your trading broker using a Demat account and ASBA facility (explained below).

  2. Institutional Investor: Large investors like banks and mutual funds have a separate application process.

Q: What is ASBA? 

ASBA (Application Supported by Blocked Amount) is a safe and convenient method to apply for IPOs. With ASBA, the funds you bid for the IPO are blocked in your bank account and only debited if your bid is successful. This prevents unsuccessful applicants' money from being tied up.


Q: What is the difference between a fixed-price and a book-building IPO?

  1. Fixed-Price IPO: The company sets a fixed price for the shares offered in the IPO.

  2. Book-Building IPO: The price of the shares is determined based on investor demand during a bidding process.

Q: What are the risks involved in investing in IPOs?

  1. New companies: IPOs often involve young companies with limited track records, so there's a higher risk of their stock price being volatile.

  2. Overvaluation: Some IPOs can be overvalued, leading to a potential drop in share price after listing.

Q: How much should I invest in an IPO?

IPO investments should be a part of a diversified portfolio. Only invest what you can afford to lose, considering the inherent risks involved.


Q: What happens after I apply for an IPO?

The company allocates shares based on the bids received. You will be notified if your application is successful or not. The shares will then be credited to your Demat account after the listing date.


Q: When should I sell my IPO shares?

This is a personal decision based on your investment goals and risk tolerance. Some investors hold for the long term, while others may sell soon after listing to capture potential gains.


Q: Where can I find information about upcoming IPOs?

Many financial websites and brokerage firms provide information on upcoming IPOs, including issue details, timelines, and prospectuses.


Q: What are the tax implications of investing in IPOs?

Short-term capital gains tax applies to IPO shares sold within one year of purchase. Long-term capital gains tax applies if held for over a year, and the rates may vary depending on the country's tax regulations.

 



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