A preferred play on India’s wireless growth story
Bharti Hexacom (Hexacom), the licensed operator of wireless and fixed-line services under the Airtel brand in Rajasthan and North East circles, provides pure-play exposure to the two high-growth businesses of Airtel – India wireless and Home broadband. Moreover, given lower teledensity and lower internet penetration in Hexacom circles (vs. pan-India), we believe Hexacom can potentially grow a few percentage points faster than Airtel on both subscribers and ARPU. Further, with significantly lower penetration of fixed broadband in Hexacom’s circles and the recent ramp-up of Fixed Wireless Access (FWA) offerings, we believe Hexacom’s wired broadband business could also grow at a faster clip. We initiate coverage on Hexacom with a BUY rating and a TP of INR1,625, premised on 13x FY27E EV/EBITDA (on par with our Airtel’s India wireless multiple). Our preference for Hexacom over Airtel is largely driven by lower capital misallocation concerns.
Valuation and view: Initiate coverage with a BUY rating
Our scenario analysis indicates a favorable risk-reward for Hexacom with ~41% upside in our bull case TP of INR1,875, premised on a 20% tariff hike in Dec’25, followed by ~7% ARPU CAGR over FY27-34 and a modest ~13% downside in our bear case TP of INR1,150, which is premised on ~10% tariff hike in Dec’25, followed by ~5% ARPU CAGR over FY27-34. We initiate coverage on Hexacom with a BUY rating and a TP of INR1,625 (implying a 22% upside).
Bharti Hexacom is a preferred play on India’s wireless growth story
Leave a Reply