Multibagger stock: Bharti Hexacom share price soars 136% in 11 months. Motilal Oswal stays bullish on stock; here’s why | Stock Market News

Even though Bharti Hexacom share price has seen a solid gains of over 100 per cent since its listing in April 2024, brokerage firm Motilal Oswal Financial Services remains bullish about the stock due to the company’s health growth prospects.

Bharti Hexacom stock debuted on Indian bourses on April 12, 2024. As of March 7, close to ₹1,343.05, the multibagger stock has jumped 136 per cent against its issue price of ₹570 per equity share.

Bharti Hexacom is the licensed operator of wireless and fixed-line services under the Airtel brand in Rajasthan and the North East.

Motilal Oswal has initiated coverage on the stock with a buy call, pegging the target price of ₹1,625. This implies a 21 per cent upside potential from the stock’s March 7 close of ₹1,343.05 on the NSE.

A stock to buy

Here’s what the brokerage firm says about the stock:

A preferred play on India’s wireless growth story

Motilal observed that Bharti Hexacom provides pureplay exposure to the two high-growth businesses of Airtel – India wireless and Home broadband.

“Given lower teledensity and lower internet penetration in Hexacom circles (versus pan-India), we believe Hexacom can potentially grow a few percentage points faster than Airtel on both subscribers and ARPU (average revenue per user),” said Motilal.

The brokerage firm believes with significantly lower penetration of fixed broadband in Hexacom’s circles and the recent ramp-up of fixed wireless access (FWA) offerings, the company’s wired broadband business could also grow at a faster clip.

Presence in under-penetrated circles offers a longer runway for growth

The brokerage firm highlighted that “Hexacom’s circles account for nearly 6 per cent of India’s GDP and nearly 7 per cent of India’s population. However, wireless telephony penetration in Hexacom circles is a few percentage points lower than pan-India levels.”

“Internet penetration (both wireless and fixed broadband) is also lower than pan-India levels, which provides a longer runway for growth through higher subscriber growth, ARPU improvements, and non-data-to-data upgrades,” said Motilal.

Lower competitive intensity to improve margins

Motilal observed that Hexacom circles are more consolidated, theoretically providing better pricing power and lower customer acquisition costs, thereby boosting margin.

Industry-leading ARPU

Motilal Oswal underscored Bharti’s continued focus on premiumisation, upgrading non-data subs to data, prepaid subs to postpaid subs, and ultimately to converged homes has led to industry-leading ARPU on a pan-India basis.

“Hexacom follows a similar strategy and is the market leader on ARPU in both its circles, benefiting from tariff repair and also a significant improvement in its data subscriber proportion to nearly 76 per cent by nine months of FY25 from nearly 56 per cent in FY21,” said Motilal.

Hexacom to become RMS (revenue market share) leader by end-FY25

“Driven by higher SMS gains, a boost from non-data to data upgrades, and superior execution on its premiumisation agenda, Hexacom has been gaining market share in both Rajasthan (RMS up nearly 13pp over last five years) and the North East (undisputed leader with nearly 57 per cent RMS),” Motilal said.

“Given Bharti’s outperformance over RJio for the past several quarters, we expect Bharti Hexacom to become the RMS leader in its circles by the end of FY25,” said the brokerage firm.

Valuation and view

Motilal expects nearly 23 per cent EBITDA CAGR over FY24-27 for Hexacom, driven by nearly 13 per cent wireless ARPU CAGR due to a nearly 15 per cent (or ₹50 per month) increase on the base plan from December 2025.

The brokerage firm added that continued market share gains, nearly 75 per cent incremental margins, and ramp-up of FWA (fixed wireless access) services, given the lower penetration of home broadband in Hexacom circles, will also drive EBITDA CAGR.

“Our scenario analysis indicates a favourable risk-reward for Hexacom with nearly 41 per cent upside in our bull case target price of ₹1,875, premised on a 20 per cent tariff hike in December 2025, followed by nearly 7 per cent ARPU CAGR over FY27-34 and a modest nearly 13 per cent downside in our bear case target price of ₹1,150, which is premised on nearly 10 per cent tariff hike in December 2025, followed by nearly 5 per cent ARPU CAGR over FY27-34,” Motilal Oswal said.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.