Global brokerage firm JPMorgan has initiated coverage on Bharti Hexacom, assigning an Overweight rating to the stock. JPMorgan has a target price of Rs 1,280 on Bharti Hexacom stock, which implies a 20% upside in Bharti Hexacom shares from its CMP of Rs 1,065.20.
JPMorgan highlights Bharti Hexacom as the “best India market repair pure-play,” noting that it operates in two underpenetrated circles, Rajasthan and the Northeast. These regions have lower teledensity, internet penetration, and postpaid mix, positioning Hexacom to benefit from strong tailwinds in subscriber growth and organic Average Revenue Per User (ARPU) expansion.
One of the significant advantages for Bharti Hexacom is its cost efficiency. The company’s spectrum cost per population (pop) for 5G is 54% and for 4G is 62% lower than Bharti’s national average. This cost advantage allows Hexacom to maintain competitive pricing while delivering superior returns.
Moreover, Hexacom’s ARPU is only 2% below Bharti’s national average, indicating strong underlying returns. JPMorgan projects a 15% tariff hike each in FY25 and FY26, driving a 17% revenue CAGR and a 21% EBITDA CAGR over FY24-27E.
The report also emphasizes Bharti Hexacom’s strategic position in the wireless market, which constitutes 98% of its revenues. This focus contrasts with Bharti Airtel and Vodafone Idea, which have more diversified revenue streams. The brokerage believes this makes Hexacom the best play on the Indian market repair thesis.
Additionally, JPMorgan forecasts a significant increase in dividend payouts, from 23% in FY24 to 34% in FY27, driven by improving free cash flow from tariff hikes and falling capital expenditures.
