Bharti Hexacom Limited IPO: Overview Strengths and Weaknesses 2024

Understanding the Bharti Hexacom Limited IPO

Bharti Hexacom Limited – After 17 years, the telecom industry in India is witnessing a mega IPO. In 2007, Video2 INR 75 crores IPO was launched. In today’s video, we will discuss Bharti Hexacom’s businesses, their strengths, weaknesses, and key financials and disclosures related to their IPO. we will first talk about BHL, which stands for Bharti Hexacom Limited, and its IPO which has recently opened for subscription in the market. Let’s discuss the status of the first day of subscription in detail. The response to the IPO has been quite poor on the first day. Now, let’s dive deeper into the details of this IPO, covering both the positive and negative points.

Introduction to Bharati Hexacom Limited

Bharti Hexacom Limited was incorporated in 1995. It is primarily a banking company that provides its services mainly in Rajasthan and the North East region. The IPO of Bharti Hexacom Limited opened on 3rd April and will close on 5th April. The allotment will be decided by the end of April 10th, and refunds or shares will be issued on April 12th, tentatively. For retail investors, there will be a lot size of 26 shares, with a basket worth ₹1,820. In the small category, you will need to apply for a minimum of 14 lots, and in the big category, you will need to apply for 68 lots. The total size of this IPO is 4,275 crores, which is a significant amount.

Offer for Sale Explanation

The offer for sale (OFS) is being made by Adjustify, which is selling its shares. The reason for selling is that Adjustify wants to see the actual price discovery and work accordingly. There is no requirement for a cash flow for the OFS. This IPO is quite large, especially considering that smaller-sized IPOs are not getting much response in the market currently. Listing is expected to happen before April 12th. In retail, there will be a lot of 26 shares, with a basket worth ₹1,820.

Bharti Hexacom’s Business Model

Bharati Hexacom Limited provides internet and calling-related services in the states of Rajasthan and the Northeast region of India. Their services in these areas generate revenue of INR 97 crore from mobile service users on airtelxtream.in, accounting for 23% of their financial year 23 revenue. In the financial year 23, they held a 39.5% revenue market share in the Rajasthan circle and a 52.5% share in the Northeast circle. Now that we understand their business, let’s look at their strengths and weaknesses.

Strengths

Regional Focus

Bharti Hexacom Limited has shown consistent growth in their wireless subscriber market share in the Rajasthan and Northeast circles over the past 3 years. Their strategy has been to provide high-value customers with competitive pricing and a superior experience. Additionally, they have witnessed growth in average revenue per user (ARPU) in these circles over the past three years. This is an important metric in the telecom industry as it indicates how much money the company is making from each customer.

Partnership with Airtel

Bharti Hexacom Limited has entered into a 70:30 share agreement with Airtel, which allows them access to Airtel’s network and enables efficient experience management and faster network deployment. This partnership helps them quickly expand their go-to-market strategy.

Weaknesses

Concentration Risk

IPO’s major revenue comes from the Rajasthan and Northeast circles, which increases their business concentration risk. They rely on third-party providers for passive infrastructure support, which leads to increased maintenance time and higher costs for network expansion.

Dependency on Third-Party Providers

In the telecom sector, there are two types of infrastructure: active and passive. While active infrastructure receives and processes signals, passive infrastructure supports this active infrastructure. Bharti Hexacom Limited relies on third-party providers for passive infrastructure, which leads to increased maintenance time and higher costs for network expansion.

Financial Analysis

If we look at the financials, there is a lot to learn. Bharti Hexacom Limited is a well-established company with stable revenue growth. The revenue growth rate is amazing and is expected to continue at a rate of % in 2022 and 2023. However, there is a negative figure visible in the form of a loss above 1000 crores. The main reason for this is that the company used to capitalize its revenue and put it into long-term. Now, the government has stated that it cannot be capitalized and it has to be included in the normal revenue, resulting in a tax liability for the previous years. Due to this, there is a negative figure visible. But if we check the total profit for 2022, it was above 1600 crores, and for the first 9 months of 2023, it is around 281 crores, which shows profitability. However, there is a negative point in our mind that this segment has a lot of government control, and any negative change in government policy can negatively impact all the companies in this complete segment. Also, as Bharti Hexacom Limited Limited is listed in the same segment where we already have other listed companies, IPO being a smaller company becomes a slight negative point. But let’s discuss further.

Expectations from Tomorrow’s Market

In tomorrow’s market, we can expect a bounce back if the market opens with a gap down. If the market opens flat, then it becomes a confusing range where we cannot do anything randomly after a flat opening. We can look for an Inside Candle strategy or a 10 EMA strategy. For example, if you check the market today, it formed a confusing range where the market confused multiple times and gave a trip towards the downside. In this scenario, until the market breaks the level of 22,550, we should look for stands on the positive side and short only on an intraday basis with a strict stop loss. The general market trend is still in an uptrend, and we have seen that after giving a big momentum, the market usually spends time in a small range. However, next week, we can expect a big move in the market. If the market breaks this range, then we can expect a range of 250 to 300 points towards the downside, where we can find an opportunity. If the market opens flat, then it becomes a confusing range. But in a range without any strategy, it is difficult to work. On the screen, you can find a link to check out Early Chart Play if you don’t have a DEMat account, and you want to invest. You can also book a free call with our team if you want to invest in mutual funds but don’t invest in them currently.

Financial Details of the IPO

Bharti Hexacom Limited’s IPO has the following important details:

• Opening Date: 3rd April 2024
• Closing Date: 5th April 2024
• Listing Date: 12th April 2024
• Price Band: INR 542 to INR 570 per share
• Lot Size: 26 shares
• Issue Size: INR 4,275 crores
• No fresh issue, only offer for sale

Bharti Hexacom Limited objectives with this IPO are to enhance their brand visibility and image, as well as provide liquidity to their investors. According to reports, Bharti Hexacom Limited‘s grey market premium, also known as GMP, is at 9%. This means that Bharti Hexacom Limited shares are being sold at a premium price in the market. However, it is important to note that a company’s GMP is purely speculative and subject to market risks.

Market Analysis

The general market trend is still in an uptrend. By the end of this week, we can expect a big move in the market. If the market opens with a gap down, there will be a perfect area for a bounce back around 250 to 300 points between 2250 and 3000. This will provide us with an opportunity. However, if the market opens flat, it becomes a confusing range where we cannot do anything randomly. We can use strategies like Inside Candle or 10 EMA to find opportunities. For example, if you check the market today, it formed a confusing range where the market confused multiple times and then gave a trip towards the downside. In this scenario, until the market breaks the level of 22,550, we should look for stands on the positive side and short only on an intraday basis with a strict stop loss. It is important to note that in an intraday short, we don’t have any other options than a strict stop loss, as the position short is not possible until the market breaks its base. The general market trend also indicates that until the market breaks this level, it is ready to give a big momentum.

Most likely, if it happens tomorrow, it will be an exciting thing for us. The probability increases if it happens tomorrow, or else we can expect it in the next four to five days. As we discussed earlier, if we break this level, then we are ready to give a big momentum towards the downside.

Conclusion

In conclusion, the Bharti Hexacom Limited IPO does not excite me much as I am not in the mood to invest in a big HNI. I feel that my risk is a bit higher there. Considering that we already have companies listed in the same segment as Bharti Hexacom Limited and they are bigger than Bharti Hexacom Limited, it becomes a slightly negative point for me to study another company. However, if the subscription for this IPO is very good, I might consider putting some lots. I would like to know your opinion about this complete IPO. Please comment and let me know. This IPO review of Bharti Hexacom provides an overview of their strengths, weaknesses, and financials. If you found this Bharti Hexacom IPO review helpful, please like this video and share it with your friends. Subscribe to our channel to stay updated with in-depth IPO reviews. Please note that this video is purely for educational purposes and does not recommend or endorse any information provided.

Disclaimer: The information is only for information purpose only. It is always recommended to consult with certified financial experts before making any investment decisions. Follow busymoneyfreak.com .