IPO of Bharti Hexacom Limited

Bharti Hexacom Limited is set to launch its Initial Public Offering (IPO), presenting investors with an opportunity to participate in its growth trajectory. The IPO, valued at Rs 4,275.00 crores, comprises an offer for sale of 7.5 crore shares.

The subscription for the Bharti Hexacom IPO commences on April 3, 2024, and concludes on April 5, 2024. The allotment is scheduled to be finalized by April 8, 2024. Following this, the IPO is slated to list on both BSE and NSE, with a tentative listing date fixed as April 12, 2024.

Investors can participate in the IPO within the price band of Rs. 542 to Rs. 570 per share. The minimum lot size for application stands at 26 shares. Retail investors can enter the fray with a minimum investment of Rs. 14,820. However, for sNII and bNII investors, the minimum lot size investment is 14 lots (364 shares) and 68 lots (1,768 shares) respectively, amounting to Rs. 207,480 and Rs. 1,007,760.

SBI Capital Markets Limited, Axis Capital Limited, Bob Capital Markets Limited, ICICI Securities Limited, and IIFL Securities Ltd are the book running lead managers for the IPO. KFin Technologies Limited is appointed as the registrar for the issue.

Key Details of the Bharti Hexacom Initial Public Offering

The Bharti Hexacom IPO is scheduled to be open for subscription from April 3, 2024, to April 5, 2024. The face value of each share is Rs. 5, with a price band set between Rs. 542 to Rs. 570 per share. Investors can participate in the IPO with a minimum lot size of 26 shares.

The total issue size stands at 75,000,000 shares, aggregating up to Rs. 4,275.00 Crores. This comprises an offer for sale of the same number of shares, each valued at Rs. 5, making up the total issue size. The issue type is classified as a Book Built Issue IPO.

Post-issue, the shares will be listed on both BSE and NSE. Prior to the issue, the shareholding was 500,000,000 shares, and it remains the same post-issue, indicating no change in the total shareholding.

Bharti Hexacom Initial Public Offering Reservation

Bharti Hexacom’s IPO reservation scheme is structured to accommodate various investor categories, ensuring fair participation and distribution of shares.

QIB Allocation: Qualified Institutional Buyers (QIBs) are allotted a share portion not exceeding 75% of the Net Issue. This provision caters to institutional investors like mutual funds, insurance companies, and foreign institutional investors (FIIs), allowing them substantial participation in the IPO.

Retail Investors Allocation: Retail investors, comprising individual investors, are offered a share portion capped at not more than 10% of the Net Issue. This allocation aims to provide opportunities for small investors to participate in the IPO and benefit from the company’s growth prospects.

NII (HNI) Allocation: Non-Institutional Investors (NIIs), also known as High Net Worth Individuals (HNIs), are allotted a share portion not exceeding 15% of the Net Issue. This category includes wealthy individuals and corporate bodies who seek to invest significant amounts in the IPO.

This reservation framework ensures a balanced distribution of shares among different investor categories, fostering a diverse investor base and enhancing overall market participation in the Bharti Hexacom IPO.

Tentative Schedule for the Bharti Hexacom IPO Timeline

The Bharti Hexacom IPO is set to unfold according to a well-defined timeline, ensuring clarity and efficiency in the process.

IPO Opening and Closing: Investors can participate in the IPO from April 3, 2024, with the subscription window closing on April 5, 2024. This period offers ample time for investors to assess and subscribe to the IPO.

Allotment and Refunds: The basis of allotment is scheduled for April 8, 2024, followed by the initiation of refunds on April 10, 2024. These steps streamline the allocation process and facilitate timely refunds for investors.

Share Credit and Listing: Shares will be credited to investors’ Demat accounts on April 10, 2024, ensuring seamless ownership transfer. Subsequently, the listing date is fixed for April 12, 2024, marking the commencement of trading on both BSE and NSE.

Cut-off Time for UPI Mandate Confirmation: A crucial deadline for investors is the cut-off time for UPI mandate confirmation, which is set at 5 PM on April 5, 2024. This ensures prompt processing of mandates and smooth participation in the IPO.

Grey Market Premium (GMP) for the Bharti Hexacom IPO

The Grey Market Premium (GMP) serves as an indicator of investor sentiment and potential listing price dynamics in the Bharti Hexacom IPO. As of the latest update on March 29th, 2024, at 10:24 AM, the last reported GMP stands at Rs. 37.

Estimated Listing Price: Considering the GMP alongside the IPO’s price band of Rs. 570.00, the estimated listing price for Bharti Hexacom IPO is projected at Rs. 607 (cap price + today’s GMP). This implies a potential gain of 6.49% per share.

Retail and Small HNI Subject to Sauda: Retail investors are subject to a Sauda rate of Rs. 700, whereas Small High Net Worth Individuals (HNI) are subject to a Sauda rate of Rs. 9800. These rates reflect the expectations and demand in the grey market for the IPO shares.

Daily GMP Trends: The GMP is updated daily, providing insights into the grey market activities surrounding Bharti Hexacom IPO. Over the last 7 sessions, the GMP has ranged from Rs. 30 to Rs. 65, indicating fluctuations in investor sentiment. The current GMP of Rs. 37 suggests signals towards the lower side, emphasizing the importance of monitoring daily price trends for informed decision-making.

IPO Lot Size for Bharti Hexacom

Investors eager to participate in the Bharti Hexacom IPO have the flexibility to bid for shares according to their investment preferences. The minimum bid comprises 26 shares, with subsequent bids in multiples thereof. The table below illustrates the minimum and maximum investment options for both retail investors and High Net Worth Individuals (HNIs).

Retail Investors: For retail investors, the minimum bid starts at 1 lot (26 shares), amounting to Rs. 14,820. The maximum bid stands at 13 lots (338 shares), totaling Rs. 192,660. This range caters to investors with varying investment capacities.

Small High Net Worth Individuals (S-HNI) and Big High Net Worth Individuals (B-HNI): S-HNIs can bid for a minimum of 14 lots (364 shares), equivalent to Rs. 207,480, while their maximum bid is set at 67 lots (1,742 shares), amounting to Rs. 992,940. On the other hand, B-HNIs have a higher minimum bid of 68 lots (1,768 shares), totaling Rs. 1,007,760, ensuring participation from investors with substantial capital.

The diverse lot size options empower investors to tailor their bids according to their investment capacity and objectives, fostering inclusivity and accessibility in the Bharti Hexacom IPO.

Promoter Holding in the Bharti Hexacom IPO

Bharti Airtel Limited stands as the Promoter of Bharti Hexacom Limited. Before the IPO, the Promoter holds 70.00% of the shares. However, the post-issue shareholding remains undisclosed as of now.

The substantial Promoter holding reflects their confidence and commitment to the company’s growth trajectory. This significant stake reinforces the alignment of interests between the Promoter and other shareholders, fostering stability and long-term value creation.

Investors keen on participating in the Bharti Hexacom IPO can consider the Promoter’s stake as a key aspect while evaluating the company’s prospects and potential for future growth.

Overview of Bharti Hexacom Limited

Established in 1995, Bharti Hexacom Limited has been a stalwart in the telecommunications sector, offering fixed-line telephone and broadband services primarily in Rajasthan and the North East circles of India. Catering to states like Rajasthan, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura, the company has cemented its presence across diverse regions.

Investment in Digital Infrastructure: With a forward-looking approach, Bharti Hexacom has invested significantly in digital infrastructure capital expenditures, totaling Rs. 206 billion by December 31, 2023. This substantial investment underscores the company’s commitment to staying ahead in the digital revolution and catering to evolving customer needs.

Expansive Customer Base and Distribution Network: As of December 31, 2023, Bharti Hexacom boasts a robust customer base, serving 27.1 million customers across 486 census towns. The company’s distribution network is equally impressive, comprising 616 distributors and 89,454 retail touchpoints, facilitating seamless access to its services.

Focus on Data Services: Data services play a pivotal role in Bharti Hexacom’s offerings, with 19,144 thousand data customers as of December 31, 2023. Notably, a vast majority of these customers, 18,839 thousand, are 4G and 5G subscribers, highlighting the company’s emphasis on advanced technology and high-speed connectivity.

Bharti Hexacom Limited continues to redefine the telecom landscape, leveraging innovation and investment to provide cutting-edge services to its widespread customer base.

Restated Standalone Financial Information of Bharti Hexacom Limited

Bharti Hexacom Limited’s financial standing, as restated on a standalone basis, reveals notable trends and figures across key parameters.

Revenue and Profit Dynamics: Between the financial years ending with March 31, 2023, and March 31, 2022, the company witnessed a 22.3% surge in revenue, reflecting a robust growth trajectory. However, the profit after tax (PAT) experienced a notable decline of -67.2% during the same period. This disparity highlights the complex operational landscape and the company’s efforts to navigate through challenges while sustaining revenue growth.

Asset and Net Worth Expansion: The company’s asset base exhibited steady growth, escalating from Rs. 15,003.50 Crore as of March 31, 2021, to Rs. 19,603.00 Crore as of December 31, 2023. Similarly, the net worth of Bharti Hexacom showed an upward trajectory, indicating strengthened financial foundations and operational efficiency.

Reserves, Surplus, and Borrowings: Reserves and surplus witnessed a consistent increase over the period, reflecting prudent financial management and retained earnings. However, total borrowings fluctuated, indicating varying capital requirements and debt management strategies.

Critical Performance Indicator

As of December 31, 2023, Bharti Hexacom IPO’s performance can be gauged through key indicators, shedding light on its financial health and market positioning.

Debt/Equity Ratio: The Debt/Equity ratio stands at 1.41, indicating that the company’s debt levels are 1.41 times its equity. This ratio provides insights into the company’s leverage and financial risk management strategies.

Return on Net Worth (RoNW): Bharti Hexacom IPO’s Return on Net Worth (RoNW) is recorded at 7.08%. This metric signifies the company’s efficiency in generating profits relative to its net worth, showcasing its ability to utilize shareholder funds effectively.

Price-to-Book Value (P/BV) Ratio: With a Price-to-Book Value (P/BV) ratio of 6.45, the market values Bharti Hexacom IPO at 6.45 times its book value per share. This ratio reflects investor sentiment regarding the company’s growth prospects and asset value.

Market Capitalization: The market capitalization of Bharti Hexacom IPO is Rs 28,500 Crore, representing the total market value of the company’s outstanding shares in the market. This figure is indicative of the market’s perception of the company’s worth.

Purposes of the Bharti Hexacom IPO Issue Objectives

The Bharti Hexacom IPO aims to achieve the following objectives:

Offer for Sale: The primary objective is to carry out the Offer for Sale of up to 75,000,000 Equity Shares by the Selling Shareholder. This entails providing existing shareholders an avenue to divest their holdings in the company, thereby unlocking value and realizing returns on their investment.

Listing Benefits: Another key objective is to attain the benefits associated with listing the Equity Shares on the Stock Exchanges. By listing on the stock exchanges, Bharti Hexacom aims to enhance visibility, liquidity, and accessibility of its shares to a wider investor base. This listing facilitates transparency and enables investors to participate in the company’s growth story through trading in the secondary market.

By pursuing these objectives, Bharti Hexacom IPO seeks to strengthen its market presence, optimize shareholder value, and leverage the capital markets for its continued growth and development initiatives.