Mumbai, June 6 (IANS) Bharti Hexacom’s shares dropped over 3.5 per cent to Rs 1,810 on Friday during the intra-day trading session on the National Stock Exchange (NSE), after brokerage firm Motilal Oswal downgraded the stock from a ‘Buy’ to a ‘Neutral’ rating and set a target price of Rs 1,900.
The brokerage said the downgrade was mainly due to the stock’s high valuation, which is currently around 40 per cent more expensive than Bharti Airtel.
“Risk-reward no longer attractive; downgrade to Neutral,” said the brokerage.
Motilal Oswal believes this makes the risk-reward profile less attractive for investors, even though the company continues to show strong performance and growth through premium services.
It expects Bharti Hexacom to become debt-free (excluding lease liabilities) by the financial year 2027.
The brokerage also predicts that the company’s dividend will rise from Rs 10 per share in FY25 to Rs 30 per share by FY27.
The average revenue per user (ARPU) is expected to go up from Rs 242 in FY25 to Rs 284 by FY27, supported by a likely tariff hike in December 2025.
Beyond FY28, the brokerage expects ARPU to grow at a slower rate of 5.5 per cent annually, while overall revenue and EBITDA growth may settle around 7 per cent.
However, the firm added that any significant boost in valuation will depend on ARPU growing faster than expected.
Motilal Oswal also flagged some concerns. Bharti Hexacom’s operations are concentrated in a few telecom circles, which could limit further growth.
Additionally, the government still holds a 15 per cent stake in the company, and this is seen as a risk factor — especially because the government lacks board representation and had earlier raised objections related to the Indus Towers deal, the brokerage said.
The brokerage also mentioned that any potential corporate moves, such as stake sales, could put pressure on the stock’s valuation.
It further warned that a possible merger with Bharti Airtel could be risky, especially if the share swap ratio turns out to be unfavourable due to Bharti Hexacom’s current high valuation.
Around 12:45 pm on Friday, Bharti Hexacom was trading at Rs 1,810, down about 3.62 per cent or Rs 68.
The stock has still gained 24 per cent so far this year and has jumped 74 per cent over the past 12 months.
–IANS
pk/na
Disclaimer
The information contained in this website is for general information purposes only. The information is provided by BhaskarLive.in and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Through this website you are able to link to other websites which are not under the control of BhaskarLive.in We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, BhaskarLive.in takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
For any legal details or query please visit original source link given with news or click on Go to Source.
Our translation service aims to offer the most accurate translation possible and we rarely experience any issues with news post. However, as the translation is carried out by third part tool there is a possibility for error to cause the occasional inaccuracy. We therefore require you to accept this disclaimer before confirming any translation news with us.
If you are not willing to accept this disclaimer then we recommend reading news post in its original language.
