Bharti Hexacom shares down 6% after Jefferies downgrades stock

The new price target is slightly above Bharti Hexacom’s last closing price of ₹1,257.15 on the NSE.

At 10:45 am, Bharti Hexacom stock plunged over 8.72 per cent to ₹1,161.90 per share. The shares surged over 15.13 per cent in the last one month and 45.58 per cent in the last six months.

During the recent spectrum auctions, Bharti Hexacom acquired 15 MHz spectrum for ₹1,001 crore. According to Jefferies, although this acquisition was unexpected, it is expected to enhance the company’s data services.

Jefferies has reduced its earnings estimates for Bharti Hexacom by 4 percent to account for the spectrum expenditures.

Despite this, the brokerage still predicts that Bharti Hexacom’s revenue and EBITDA will grow at a compounded annual growth rate (CAGR) of 17 percent and 23 percent, respectively, from FY24 to FY27.

However, Jefferies now views the shares of Bharti Hexacom as having limited upside potential, given the significant increase in their value since the company’s listing in April this year.

Jefferies noted that the stock is currently trading at an EV/EBITDA multiple of 16 times, which is over 20 percent higher than Bharti Airtel’s India operations, thus limiting further upside potential.

In a previous report, Jefferies highlighted that Bharti Hexacom represents a strong investment opportunity within the Indian telecom sector. It allows investors to capitalize on segments of Bharti Airtel’s business that are experiencing faster growth, higher return on capital employed (RoCE), and better free cash flow (FCF) conversion rates, according to the brokerage.

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Published: 27 Jun 2024, 04:32 PM IST