Here Is What to Expect from Bharti Hexacom’s Rs 4275 Cr IPO

The upcoming initial public offering of Bharti Hexacom, a subsidiary of Bharti Airtel, is set to make a significant impact in the Indian stock market with its offer size of Rs 4,275 crore. This IPO is unique as it is structured entirely as an offer-for-sale (OFS), implying that the proceeds from this offering will go to the selling shareholders rather than to the company for its development or expansion. 

The price band for this IPO has been set between Rs 542 to Rs 570 per share. This range has been decided to cater to a wide range of investors, balancing both the interests of the selling shareholders and the market affordability.

Lot Size and Entry Threshold

A key aspect that potential investors should consider is the minimum investment required. The IPO has been designed to be accessible to a broad spectrum of investors. With a minimum lot size of 26 shares, the investment threshold stands at Rs 14,092 at the lower price band and Rs 14,820 at the upper end. 

This specific lot size and pricing strategy demonstrate the company's intent to attract a diverse group of investors, from individuals to larger institutional entities.

Corporate Profile and Market Positioning 

Established in 1995, Bharti Hexacom has been a prominent player in the telecommunications industry, particularly in the North Eastern regions and Rajasthan. Specializing in fixed-line telephone and broadband services, the company has built a substantial customer base over the years. 

Their market presence is further bolstered by an impressive distribution network comprising numerous distributors and retail touchpoints. This extensive network highlights the company's commitment to reaching a diverse customer base and maintaining a strong presence in its operational regions.

In the fiscal year FY23, Bharti Hexacom experienced a considerable decline in net profit, dropping by 67.2%. This decline was primarily due to a higher base in the preceding year, which included exceptional gains. However, despite this decline, the company continued to exhibit healthy revenue growth, registering a 21.7 %increase in operations revenue compared to the previous fiscal year. These figures reflect the company's underlying financial resilience and its ability to maintain a positive revenue trajectory despite fluctuations in net profit.

Risk Factors and Lead Managers' Expertise

Potential investors should carefully consider various risk factors associated with this investment. One of the primary risks is the company's operational focus on specific geographic regions, primarily Rajasthan and the North East. Any unfavorable developments in these areas could significantly impact the company's business and financial outcomes. 

Additionally, the telecom industry's nature, characterized by regulatory changes and pricing pressures, could affect the company's revenue streams. Nevertheless, the IPO is managed by a consortium of esteemed financial institutions, including SBI Capital Markets, Axis Capital, and ICICI Securities, which brings a level of expertise and credibility to the management of the offering.

Listing and Market Entry

With the IPO set to list on major stock exchanges such as BSE and NSE on April 12, 2024, it presents a noteworthy opportunity for investors interested in the telecommunications sector. The company's strategic investments in digital infrastructure, coupled with its considerable customer base, indicate potential for future growth and sustainability. 

The choice of listing date and the exchanges are in line with the company's strategic vision for broader market reach and enhanced visibility in the investor community.