Bharti Hexacom Gets Second Best Target Price As JPMorgan Initiates 'Overweight'

Bharti Hexacom Ltd. gained in early trade on Tuesday after JPMorgan initiated coverage with an 'overweight' rating. The brokerage cited strong tailwinds from subscriber growth and organic expansion in average revenue per user for while opening coverage on the stock.

The brokerage has given a target price of Rs 1,280 apiece on the stock, implying a potential upside of 20% from the previous close. This is second highest for the counter after Ambit capital's Rs 1,550 per share.

The Indian telecom sector will enjoy market repair after Vodafone Idea Ltd.'s recapitalisation and lack of 5G monetisation by Reliance Jio Infocomm Ltd. and Bharti Airtel Ltd., JPMorgan said in a note dated July 15. "Hexacom operates in the two underpenetrated circles that have lower teledensity, internet penetration and postpaid mix."

JPMorgan estimates 15% tariff hikes after the recent ones in the financial year ending March 2026. This will drive a 17% and 21% compound annual growth rate in revenue and Ebitda respectively for Hexacom, the brokerage said. This sets it up for stronger tailwinds on organic ARPU expansion from smartphone upgrades and postpaid upgrades and higher subscriber growth over fiscal 2024–27, the note said.

Hexacom enjoys higher underlying returns versus national peers, with much-lower spectrum cost, tariff hikes and falling capital expenditure should help increase the return on invested capital and also reduce the net debt to the earnings before interest, taxes, depreciation and amortisation, according to JPMorgan.