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

Bharti Airtel's subsidiary Bharti Hexacom initial public offerings (IPO) will hit the primary market tomorrow i.e. April 3. The issue will remain open for subscription till April 5.

Broadband services provider has set the price band of its upcoming public issue at ₹542 to ₹570 per equity share, with a face value of ₹5. 

At least 75% of the allocation has been earmarked for qualified institutional buyers (QIBs), while no more than 15% is designated for non-institutional investors (NIIs), and a maximum of 10% is reserved for retail investors.

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

The Red Herring Prospectus issued by the firm reveals that the Bharti Hexacom IPO comprises solely of an offer-for-sale (OFS) and does not involve a fresh issue component. Telecommunications Consultants India, the exclusive selling shareholder of the company, plans to divest 7.5 crore equity shares, equivalent to 15% of the OFS.

Here are five important factors to consider before investing into Bharti Hexacom IPO -

Bharti Hexacom IPO size

The Red Herring Prospectus issued by the firm reveals that the Bharti Hexacom IPO comprises solely of an offer-for-sale (OFS) and does not incorporate a fresh issue segment. Telecommunications Consultants India, the exclusive selling shareholder of the company, plans to raise over ₹4,275 crore by divesting 7.5 crore equity shares, equivalent to 15% of the OFS.

Bharti Hexacom IPO key risks involved

Some of the key risks involved in the Bharti Hexacom IPO are -

• The company derive our revenues from providing mobile telephone services in Rajasthan and the North East circle and any unfavourable developments in such regions could adversely affect its business, results of operations and financial condition.
• There are outstanding legal proceedings involving its promoter, in addition to the company. Any adverse outcome in any of these proceedings may adversely affect the reputation, business, financial condition and results of operations.
• As of December 31, 2023, the company had contingent liabilities which have not been provided for in its Restated Financial Information and could adversely affect its business, financial condition and results of operations.
• Reduction in revenue it earns through its telecom services, due to regulatory ceilings on pricing, or owing to pricing pressure, reduction in average revenue per user ("ARPU"), may have an adverse effect on the business, financial condition, results of operations and prospects.

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

Bharti Hexacom IPO GMP 

The shares of Bharti Hexacom IPO are trading at a premium of ₹47 in the grey market premium, according to investorgain, which further highlights that the current GMP s showing signals towards the lower side.

As per the analysts at investorgain, the lowest GMP of Bharti Hexacom IPO is ₹30, while the highest GMP is ₹65. The estimated listing price of the Bharti Hexacom IPO is ₹617, which is 8.25% more than the IPO price of ₹570.

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

Bharti Hexacom IPO objective

The main objective behind the public issue of Bharti Hexacom IPO is to carry out the offer for sale of up to 75,000,000 equity shares by the selling Shareholder and achieve the benefits of listing the equity shares on the stock exchanges.

Bharti Hexacom IPO promoters

According to the DRHP, , Bharti Airtel Limited is the promoter of Bharti Hexacom. As on the date of this Red Herring Prospectus, the promoter holds 350,000,000 equity shares in the company, representing 70 percent of the pre-offer issued, subscribed and paid-up equity share capital of the company.