Bharti Hexacom Limited IPO

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This business overview outlines a comprehensive strategy and operational model for a communications solutions provider operating under the brand ‘Airtel’ within the Rajasthan and North East telecommunication circles of India. This includes the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura. The company positions itself as a premium service provider, focusing on acquiring and retaining high-quality customers. This strategy is executed through an omnichannel approach, leveraging data science to enhance customer experiences.

A key aspect of Airtel’s offering is its digital services, aimed at increasing customer engagement through customized plans. One such initiative is the Airtel Black proposition, which offers converged services to families, contributing to the company’s growing revenue market share over the last three fiscal years. The business model emphasizes cost optimization and maintaining an efficient capital structure to bolster profitability and manage leverage effectively.

Investments in digital infrastructure are central to Airtel’s growth strategy, with a significant capital expenditure of ₹206 billion up to December 31, 2023. This investment underscores the company’s commitment to network expansion, technology advancement, and strategic spectrum acquisitions, ensuring the infrastructure is future-ready. Moreover, Airtel benefits from synergies with its Promoter, leveraging an expansive digital infrastructure and suite of digital services to meet the diverse needs of its customer base.

This overview encapsulates Airtel’s strategic direction, focusing on premiumisation, digital transformation, and operational efficiency. The approach not only seeks to enhance the customer experience but also positions the company for sustainable growth in a competitive market.

Objects of the Bharti Hexacom Limited IPO:

The objects of the Offer are to i. To carry out the Offer for Sale of up to 75,000,000 Equity Shares by the Selling Shareholder; and ii. Achieve the benefits of listing the Equity Shares on the Stock Exchanges. Total number of share issues:- Offer for Sale is 75,000,000 shares.
DRHP of Bharti Hexacom Limited IPO
RHP of Bharti Hexacom Limited IPO

Bharti Hexacom Limited IPO Details:

Open Date: Apr 03 2024
Close Date: Apr 05 2024
Total Shares: 75,000,000
Face Value: ₹ 5 Per Equity Share
Issue Size: 4,275.00 Cr.
Lot Size: 26 Shares
Issue Price: ₹ 542 - 570 Per Equity Share
Listing At: NSE,BSE
Listing Date: Apr 10 2024

Promoters And Management:

Jagdish Saksena Deepak is the Chairperson of the Board of the Company. He completed his post graduate diploma in management from Indian Institute of Management, Ahmedabad. Prior to joining the Company an Indian Administrative Service officer and served as the Ambassador / Permanent Representative of India to the World Trade Organisation, Geneva. He has served as the Secretary in the Department of Telecommunications and the Department of Electronics & Information Technology, Government of India. He has over 38 years of experience in administration services in various Ministries of Government of India. Devendra Khanna is a Non-Executive Director on the Board of the Company. He is an associate member of the Institute of Chartered Accountants of India. In the past, he has been associated with Triveni Engineering & Industries Limited. He is currently the joint managing director at Bharti Enterprises. He has over 35 years of experience inclusive of over 19 years of experience in telecommunication sector. Soumen Ray is a Non-Executive Director on the Board of the Company. He holds a bachelor’s degree in commerce (honours) from University of Calcutta, Kolkata. He is an associate member of the Institute of Chartered Accountants of India. In the past, he has been associated with Bajaj Auto Limited, Viacom 18 Media Private Limited and ITC Limited. He is currently chief financial officer of Bharti Airtel Limited and has experience in various sectors including FMCG, telecommunication, automotive manufacturing and media.

Financials of Bharti Hexacom Limited IPO:

A. Balance Sheet
Particular (In Million) Mar-21 Mar-22 Mar-23 9M-FY24
Equity Share Capital 2,500 2,500 2,500 2,500
Reserves 17,360 34,105 39,595 41,661
Borrowings 59,752 71,983 62,693 62,530
Trade Payables 22,240 14,952 14,406 16,347
Other Liabilities 48,183 43,203 63,335 72,992
Total Liabilities 130,175 130,138 140,434 151,869
Net Block 39,054 38,400 40,708 42,632
Capital work-in-progress 707 641 4,563 10,571
Other Assets 90,079 87,479 108,282 105,565
Total NC Assets 129,840 126,520 153,553 158,768
Receivables 1,429 20,958 1,489 2,316
Cash & Bank 592 1,209 887 589
Other Assets 18,174 18,056 26,600 34,357
Face value 5 5 5 5
B. Profit & Loss Statement
Particular (In Million) Mar-21 Mar-22 Mar-23 9M-FY24
Revenue from Operations 46,023 54,052 65,790 52,208
Other Income 1,020 888 1,402 2,000
Total Revenue 47,043 54,940 67,192 54,208
Network operating expenses 14,279 14,862 15,863 12,285
Access charges 13,454 11,331 9,833 5,394
License fee/Spectrum charges 4,379 5,718 6,329 4,792
Employee benefits expense 763 764 903 794
Sales and marketing expenses 1,410 1,993 3,067 2,795
Other expenses 1,214 1,244 1,938 1,314
EBITDA 11,544 19,028 29,259 26,834
Depreciation & Amortisation 12,852 14,410 15,533 12,794
Finance Cost 5,166 5,718 6,388 4,787
EBIT -1,308 4,618 13,726 14,040
OPM (%) 24.54% 34.63% 43.55% 49.50%
PBT -9,891 18,411 7,338 6,223
Tax 448 1,665 1,846 3,405
PAT -10,339 16,746 5,492 2,818
NPM (%) -21.98% 30.48% 8.17% 5.20%
No.of Shares 500 500 500 500
EPS -20.67 33.49 10.98 5.63
C. Cash Flow Statement
Particular (In Million) Mar-21 Mar-22 Mar-23 Mar-23
Cash From Operating Activity
Profit From Operation 11,515 38,716 29,301 25,860
Receivable 663 -19,791 19,075 -904
Payable 1,236 -7,727 -769 1,806
Other WC Items 2,093 1,530 3,674 2,586
Working Capital Changes 3,992 -25,988 21,980 3,488
Direct Taxes -335 -148 -197 -45
Net Cash Inflow from Operating Activity 15,172 12,580 51,084 29,303
Cash from Investing Activity
Fixed assets purchased -14,569 -13,487 -9,448 -15,674
Fixed assets sale 46 149 57 99
Investments purchased 6,485 -471 -9,680 -7,526
Other investing items -787 -16 -1,238 345
Net cash inflow from investing activities -8,825 -13,825 -20,309 -22,756
Cash from Financing Activity
Proceeds from borrowings 85,335 65,185 0 195
Repayment of borrowings -85,498 -57,070 -24,428 0
Intrest paid fin -3,409 -2,823 -3,855 -4,041
Other financing items -2,470 -3,461 -2,831 -2,978
Net Cash Flow 305 586 -339 -277
 

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Bharti Hexacom Limited 6,579 549 10.98 51.9 570 28,500
Bharti Airtel Limited 139,145 12,287 14.97 63.2 1,217 7,20,074
Vodafone Idea Limited 42,177 -29,301 -6.02 N/A 13.5 65,815
* All the data is as per FY23.

Recommendation on Bharti Hexacom Limited IPO:

Review and Recommendation of Bharti Hexacom by team IZ is 4/10. 1. Originally incorporated in 1995 as Hexacom India Limited and later rebranded to Bharti Hexacom Limited in 2004 following Airtel's majority equity acquisition, the company has evolved significantly. Airtel, a global communications solutions provider with a vast customer base, supports Bharti Hexacom with its extensive digital infrastructure and services, fostering synergies and strategic advantages. 2. The entity in question operates as a communications solutions provider under the brand name 'Airtel', predominantly serving the Rajasthan and North East telecommunication circles in India. This encompasses states such as Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura. Airtel's strategic positioning within these regions is underscored by its commitment to premiumizing its portfolio, a focus on acquiring and retaining high-quality customers, and delivering exceptional customer experiences through an omnichannel approach and advanced data science techniques. 3. Network Infrastructure and Capital Expenditure Airtel's robust network infrastructure, characterized by a mix of owned and leased assets, including 24,874 network towers, plays a crucial role in its operational efficiency and service quality. The strategic spectrum portfolio, especially in the mid-band spectrum, enables the provider to offer 5G Plus services, optimizing capital expenditure and lowering the cost of ownership. 4. Distribution Network and Customer Base The company's expansive distribution and service network, complemented by the addition of retail outlets and small format stores, ensures accessibility and convenience for customers across its operating regions. As of December 31, 2023, Airtel boasted an aggregate customer base of 27.1 million across both circles, with a significant portion being data customers. This extensive reach and customer base are instrumental in driving the company's market share and enhancing its competitive stance. 5. Competition and Industry Consolidation The telecommunications industry in India has experienced significant consolidation, leading to a competitive landscape dominated by a few major players, including Airtel, Reliance Jio Infocomm Limited, and Vodafone Idea Limited. This consolidation highlights the competitive pressures and the need for strategic differentiation in the market. 6. The Revenue has Increased from Rs.4,602 Crores in FY21 to Rs.6,579 Crores in FY23. 7. The EBITDA has Increased from 1,154 Crores in FY21 to 2,925 Crores in FY23. 8. The PAT has Increased from (-1,033) Crores in FY21 to 549 Crores in FY23. 9. As per FY23, CFO/EBITDA is 1.00, As per FY24, EPS is 7.51, 10. Market Capitalization is 28,500 Crore & P/E is 75.85x based on FY24.

Lead Manager of Bharti Hexacom Limited IPO:

  1. Axis Capital Limited
  2. BOB Capital Markets Limited
  3. ICICI Securities Limited
  4. IIFL Securities Ltd
  5. SBI Capital Markets Limited

Registrar of Bharti Hexacom Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Bharti Hexacom Limited Bharti Crescent, 1 , Nelson Mandela Road Vasant Kunj, Phase II, New Delhi-110 070 Phone: 011-46666100 Email: bhartihexacom@bharti.in Website: https://www.bhartihexacom.in/

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