Bharti Hexacom is an arm of Bharti Airtel. Its IPO opened on April 03rd,2024. The company plans to raise funds worth Rs 4,275 crores by offering 75 million shares. So it's basically an Offer For Sale [OFS], where the company's existing shareholders sell their shares to public.
The bidding will be closed by April 05 and finalized by April 08th. It is expected to get listed by April 12th.
The price band is fixed at range Rs 542 to 570 per equity share. The lot size is fixed as 26.
Kfin Technologies is the registrar for the issue.
About the company and its fundamentals:
This company is a leader in providing fixed line telephone and broadband connection services to its customers in Rajasthan and North East telecom circles. The company has widened its customer base.
When it comes to network infrastructure, the company mostly take network towers on lease. Some towers they own their own. So, they have more finances to expand their business.
The company also have the provisions for providing 5G network at low costs. Also, the company has a wider distribution network.
There are pending legal proceedings against the promoters of the company and also the company has some contingent liability [as on 31st December, 2023]
This is a red flag.
When it comes to fundamentals, the company has been increasing its operating profit margins[OPM] every year. Currently the OPM is at 42% as on 31st March. Which is a good sign.
The company's borrowings have increased slightly. However, the portion of fixed asset is more than the borrowings, so there is no fear of liquidation in near times. The debt-to-equity is at 2.19.
The ROCE of the company is 10.3% and ROE is 13.4%.
[Details of fundamentals are taken from Screener website. ]
Conclusion:
In a news article I found that, in the grey market the stock prices were at 9% premium. Grey market is like an illegal market where they buy shares before listing.
So there is a clear sign that, stock prices may probably surge atleast by 10-15% on listing.
If a person asks whether should we invest in this company, remember that the company operates mainly in Rajasthan and North East telecom circles. So any issues with government policies in those states, tight competition or changing market trends could adversely affect the company.
As I said above, the pending legal proceedings against the promoters and the outstanding contingent liability with the company are its main red flags.
Another point is, we saw that the company mostly operate leased network towers. All coins have two sides. This may reduce its capital outlay but we should note that, the company does not have full control over those leased towers. So any issues with lessor can impact the business.
For knowing other risks, I request readers to read this Mint article.
So in my opinion I would not invest in this company as of now because it has many risks and the business operates only in few states.
Post a Comment