Bharti Hexacom has drawn mixed reactions from brokerages after its Q1FY26 results, with Jefferies maintaining a bullish stance while CLSA downgraded the stock citing valuation concerns and earnings miss. The stock is currently trading at a significant premium to its parent Bharti Airtel.
Jefferies on Bharti Hexacom share: Buy, TP ₹2,250
Jefferies has reiterated a ‘Buy’ rating on Bharti Hexacom with a target price of ₹2,250. The brokerage acknowledged that while underlying revenues were broadly in line, the company’s profitability fell short of expectations due to higher-than-estimated network and other operational costs.
Despite trimming earnings estimates by 1–3%, Jefferies remains optimistic, projecting a robust 24% CAGR in EBITDA and 29% CAGR in free cash flow (FCF) over FY25–FY28. It believes Bharti Hexacom’s outperformance compared to Bharti Airtel will continue to justify premium valuations.
CLSA on Bharti Hexacom share: Downgrade to underperform, TP ₹1,525
In contrast, CLSA has downgraded Bharti Hexacom to ‘Underperform’ from its previous rating, lowering the target price to ₹1,525. The firm flagged a disappointing first quarter performance, with revenue of ₹22.6 billion down 1% QoQ and falling below estimates.
Average revenue per user (ARPU) rose 2% sequentially to ₹246, maintaining a strong 20% YoY growth and standing 18% higher than Reliance Jio. CLSA noted that while the broadband segment added a record 54,000 subscribers during the quarter, it still contributes only 3% of total revenues.
EBITDA came in at ₹11.6 billion, showing a 33% YoY increase but falling 1% QoQ and missing projections. Free cash flow stood at ₹8.5 billion, with a capex of ₹2.3 billion. The company maintains a low gearing of 1.3x.
CLSA expressed concerns over the stock’s stretched valuations, highlighting that Bharti Hexacom is trading at 15x FY27 EV/EBITDA, a 40% premium to Bharti Airtel.
Disclaimer: The views expressed in this article are those of the respective brokerages. This does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
