Target: ₹1,625
CMP: ₹1,335.70
Bharti Hexacom (Hexacom) operates as the licensed provider of wireless and fixed-line services under the Airtel brand in Rajasthan and North East circles. This offers a unique opportunity for investors to gain exposure to Airtel’s high-growth businesses – India wireless and Home broadband. With lower teledensity and internet penetration in Hexacom circles compared to the rest of India, there is potential for Hexacom to achieve faster growth in both subscribers and ARPU.
Furthermore, given the lower penetration of fixed broadband in Hexacom’s circles and the recent expansion of Fixed Wireless Access (FWA) offerings, the wired broadband business of Hexacom could also experience accelerated growth.
Initiating coverage on Hexacom with a Buy rating and a target price of ₹1,625, based on 13x FY27E EV/EBITDA, on par with Airtel’s India wireless multiple. Our preference for Hexacom over Airtel is primarily driven by lower concerns of capital misallocation.
Our scenario analysis indicates a favorable risk-reward for Hexacom, with a potential 41% upside in our bull case target price of ₹1,875. This scenario is based on a 20% tariff hike in Dec’25, followed by a 7% ARPU CAGR over FY27-34. In our bear case target price of ₹1,150, we foresee a modest 13% downside, with a 10% tariff hike in Dec’25 and a 5% ARPU CAGR over FY27-34.
