Bharti Hexacom shares jump saw a notable surge of up to 9.5 percent on July 16, following the global brokerage firm JPMorgan’s initiation of coverage with an ‘overweight’ rating. This move has sparked significant interest among investors and traders, leading to higher trading volumes and increased market activity.
Bharti Hexacom Shares Jump
JPMorgan’s endorsement of Bharti Hexacom came with a price target of ₹1,280, projecting a 20 percent upside from the previous closing level. This optimistic outlook is based on several key factors, including the company’s robust market position and promising growth prospects. The brokerage firm highlighted Bharti Hexacom’s strong presence in the wireless sector, positioning it as a standout player compared to other major telecom operators like Bharti Airtel and Vodafone Idea.
Impressive Trading Activity
On the day of the announcement, Bharti Hexacom’s shares were trading at ₹1,128.7 on the NSE during intraday trade. The trading volumes were impressive, with 1.7 million shares exchanged, significantly surpassing the one-month daily average of 1.1 million shares. This heightened activity underscores the market’s positive reception of JPMorgan’s rating and the growing confidence in Bharti Hexacom’s future performance.
Performance Since IPO
Since its IPO, Bharti Hexacom has demonstrated remarkable performance, doubling its stock price within just three months of being listed on the exchanges. However, it’s worth noting that JPMorgan’s target of ₹1,280 is still below the record high of ₹1,368.60 reached on June 26 last month. This indicates room for growth while also acknowledging the stock’s volatility.
Projected Growth and Revenue
JPMorgan’s projections for Bharti Hexacom are particularly bullish, with expectations of a 15 percent tariff hike in both the 2025 and 2026 financial years. This is anticipated to drive a compound annual growth rate (CAGR) of 17% in revenue and 21% in EBITDA over the FY24-27 period. These projections are based on the company’s strategic plans and market conditions, highlighting its potential for substantial financial growth.
Superior Returns and Dividend Increases
One of the standout points from JPMorgan’s analysis is Bharti Hexacom’s potential for superior returns. The company’s ARPU (Average Revenue Per User) is only 2 percent lower than Bharti’s, suggesting that its underlying returns are likely to remain high. Additionally, the brokerage firm expects dividend payouts to increase from 23 percent in FY24 to 34 percent in FY27, driven by improved free cash flow and reduced capital expenditures.
Strategic Market Presence
Bharti Hexacom operates in two underserved regions, Rajasthan and the North East, which have lower telecom density, internet penetration, and postpaid subscriber rates. This strategic presence in less saturated markets presents significant growth opportunities as these regions develop and demand for telecom services increases.
Contrasting Opinions
While JPMorgan has given an ‘overweight’ rating, it’s interesting to note that last month, Jefferies downgraded Bharti Hexacom shares from ‘Buy’ to ‘Hold’. However, Jefferies also raised its price target from ₹1,200 to ₹1,290, indicating a complex but generally positive outlook for the stock.
Conclusion
Bharti Hexacom’s recent performance and the positive outlook from JPMorgan have positioned the company as a compelling investment opportunity. With projected tariff hikes, strong revenue growth, and increasing dividend payouts, the future looks promising for Bharti Hexacom. Investors will be closely watching how the company navigates market conditions and capitalizes on its strategic advantages in the coming years.
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