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Business News/ Markets / Ipo/  Bharti Hexacom IPO opens today: GMP, subscription status, review, other key details. Should you subscribe or not?
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Bharti Hexacom IPO opens today: GMP, subscription status, review, other key details. Should you subscribe or not?

Bharti Hexacom, a subsidiary of Bharti Airtel, provides communication solutions in Rajasthan, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and North East circles. The IPO, with a price range of ₹542 to ₹570, has a reserved offer for QIBs, NIIs, and retail investors.

Bharti Hexacom IPO date has been scheduled for subscription today (Wednesday, April 3), and will close on Friday, April 5. Photo: MintPremium
Bharti Hexacom IPO date has been scheduled for subscription today (Wednesday, April 3), and will close on Friday, April 5. Photo: Mint

Bharti Hexacom IPO date has been scheduled for subscription today (Wednesday, April 3), and will close on Friday, April 5. The Bharti Hexacom IPO price band has been set in the range of 542 to 570 apiece of the face value of 5. On Tuesday, the Bharti Aitel's arm, garnered 1,924 crore from the anchor investors. 26 equity shares make up a Bharti Hexacom IPO lot, and in multiples of 26 equity shares thereafter. FY25 kickstarts with the Bharti Hexacom IPO in the primary market.

Not less than 75% of the offer has been reserved for qualified institutional buyers (QIB), maximum 15% of the offer has been set aside for non-institutional institutional investors (NII), and maximum 10% of the offer has been put aside for retail investors.

Also Read: Bharti Hexacom IPO: Bharti Airtel's subsidiary company raises 1,924 crore from anchor investors ahead of IPO

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Bharti Hexacom IPO details.
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Bharti Hexacom IPO details.

The Bharti Airtel subsidiary offers communication solutions to clients in Rajasthan and the Indian states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura, as well as the North East telecommunication circles. The firm offers fixed-line telephone, internet, and consumer mobile services to its customers. Under the "Airtel" name, the company provides its services.

The company's listed peers, according to the Red Herring Prospectus (RHP), include Bharti Airtel Ltd. (P/E of 82.16), Vodafone Idea Ltd. (P/E of (1.63), and Reliance Jio Infocomm Ltd.

Also Read: Bharti Hexacom IPO to open tomorrow; here are 5 factors to consider before investing

Arun Kejriwal, the founder of Kejriwal Research and Investment Services, highlighted the primary distinction between the parent firm and its subsidiary, Bharti Hexacom. Bharti Airtel owns 70% of the company, while the government of India controls the other 30%.

What separates the two is that Bharti Airtel is a global and pan-Indian player. With the exception of Assam, this firm (Bharti Hexacom) is only present in Rajasthan and six other northeastern states. There are significant differences between Bharti Airtel and this firm, explained Kejriwal.

"However, the business model is moreover similar. On the valuation front, if we look at the P/E multiple and the other factors, this is roughly a 12–15% discount to the Bharati Airtel price. So, 12–15% is a fair discount that you can expect. Secondly, Bharti Airtel is quoting at a lifetime high. Currently, when a share is at a lifetime high, it indicates that there is some performance; otherwise, it would not be so high. This is the key difference," said Arun.

Also Read: Bharti Hexacom IPO: From price band to GMP, here are 10 things to know before subscribing to the issue

Bharti Hexacom IPO subscription status

In a flat market on Wednesday, the Bharti Hexacom IPO looks to make its way on Day 1 of subscription.

The overall Bharti Hexacom IPO subscription status was 34%, as per BSE data. The retail portion was subscribed 48%, and non-institutional investors (NII) portion was booked 36%. The qualified institutional buyers (QIBs) portion was booked 29%.

Bharti Hexacom IPO has received bids for 1,41,19,196 shares against 4,12,50,000 shares on offer, according to data from the BSE.

The retail investors' segment received bids for 36,29,886 shares against 75,00,000 shares on offer for this segment.

The NIIs portion got bids for 40,09,200 shares against 1,12,50,000 on offer for this segment.

The QIBs segment got bids for 64,80,110 shares against 2,25,00,000 on offer for this segment.

Also Read: Bharti Hexacom IPO receives lukewarm response on Day 1, issue booked 18%; check latest GMP

Bharti Hexacom IPO details

The Red Herring Prospectus of the firm states that the Bharti Hexacom IPO consists only of an offer-for-sale (OFS) and does not include a fresh issue component. Telecommunications Consultants India, the company's sole selling shareholder intends to sell off 7.5 crore equity shares, or 15% of the OFS.

As per the draft red herring prospectus (DRHP) of the firm, Telecommunications Consultants, which is controlled by the government, had originally intended to offer up to 10 crore equity shares.

The book running lead managers of the Bharti Hexacom IPO are SBI Capital Markets Limited, Axis Capital Limited, Bob Capital Markets Limited, ICICI Securities Limited, and IIFL Securities Ltd. The registrar of the issue is Kfin Technologies Limited.

Also Read: Bharti Hexacom IPO: Company explains the reason for reducing the issue size

Bharti Hexacom IPO Review

Choice Equity Broking Pvt Ltd

As to the brokerage, Bharti Hexacom, which is being promoted by Bharti Airtel, benefits from the synergies that arise from the partnership with Bharti Airtel and its affiliates.

By leveraging the duopoly structure, Bharti Hexacom has been able to significantly enhance its operating and financial performance through a series of rate rises that it has made from November 2021. The brokerage believes that the operating and financial performance of the firm will continue to improve in the medium term, despite greater barriers to entry for new competitors, ongoing capital expenditure requirements, and rising spectrum costs.

"At higher price band, BHL is demanding an EV/TTM sales multiple of 5.4x, which is at discount to peer average of 6.5x. in-line to the peer average of 3.9x. Thus, considering the above observations, we are assigning a “SUBSCRIBE" rating for the issue," the brokerage said.

Way2Wealth Brokers Pvt Ltd

The brokerage stated that TCIL, a government of India company, is receiving a partial exit from it in order to ascertain the price and listing benefits, per the management's statement. Maybe this is the first IPO of this kind in which a GoI body uses the OFS mode to dilute its holdings in order to determine the enterprise value. This IPO also shows that, as of right now, the firm does not require any further funding to achieve its projected expansion.

"Based on 9MFY24 earnings, the issue appears fully priced. It enjoys virtual leadership in the telecom circles it is operating and is confident of maintaining the lead. Investors can SUBSCRIBE for medium to long term rewards," the brokerage said.

Bharti Hexacom IPO GMP today

Bharti Hexacom IPO GMP or grey market premium is +52. This indicates Bharti Hexacom share price were trading at a premium of 52 in the grey market, according to investorgain.com.

The Bharti Hexacom shares were projected to list at a price of 622 a share, which is 9.12% higher than the IPO price of 570 when accounting for the upper end of the IPO pricing range and the current premium on the grey market.

Grey market activity over the past 12 sessions indicates that the IPO GMP is heading upward and that a robust listing is anticipated. According to analysts at investorgain.com, the lowest GMP is 30, and the maximum GMP is 65.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Also Read: Bharti Hexacom IPO likely to launch in April, seeks valuation over 28,000 crore: Report

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

 

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Published: 03 Apr 2024, 07:57 AM IST
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