Bharti Hexacom IPO: 10 things to know before you buy into the Rs 4,275-cr issue

Telephone and broadband services company and a subsidiary of Bharti Airtel, Bharti Hexacom is all set to tap the primary market with a Rs 4,275-crore issue. The first public issue of the new financial year FY25 will open on April 3, while the anchor book will open for a day on April 2.

Here are 10 key points you must know before buying into the IPO:

1. IPO DatesThe IPO will open for subscription on April 3 and close on April 5.

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2. Price BandThe price band for the issue has been fixed at Rs 542-570 per share.

3. Offer DetailsThe IPO comprises only an offer-for-sale (OFS) with no fresh issue component. Telecommunications Consultants India, the only public shareholder in the company, will offload 7.5 crore equity shares or 15 percent stake in the OFS. The promoter of the company is Bharti Airtel, which controls a 70 percent stake and the remaining 30 percent shares (15 crore) are held by Telecommunications Consultants India.

4. Objectives of the IssueGiven the offer-for-sale nature of the issue, all the proceeds will be allotted to the selling shareholders in the company.

5. Lot SizeInvestors can bid for a minimum of 26 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,092 (26 lot size x Rs 542 or the lower price band). At the upper end, the bidding amount will increase to Rs 14,820.

6. Company ProfileEstablished in 1995, Bharti Hexacom Limited offers fixed-line telephone and broadband services primarily in Rajasthan and in the North East. With investments of Rs 206 billion in digital infrastructure by December 2023, it serves 27.1 million customers across 486 census towns through a distribution network of 616 distributors and 89,454 retail touchpoints.

7. Financials of the companyThe company experienced a 67.2 percent year-on-year decline in net profit, amounting to Rs 549.2 crore for the fiscal year FY23. This decrease was attributed to a higher base in the previous year, which included exceptional gains of Rs 1,951.1 crore. Despite this decline in net profit, the company maintained a healthy topline and operating numbers. Revenue from operations during the year grew 21.7 percent to Rs 6,579 crore compared to the previous year.

8. Lead ManagersSBI Capital Markets Limited, Axis Capital Limited, Bob Capital Markets Limited, ICICI Securities Limited and Iifl Securities Ltd are the book running lead managers of the Bharti Hexacom IPO, while Kfin Technologies Limited is the registrar for the issue.

9. Key Risks(i) The company derives its revenues from providing mobile telephone services in Rajasthan and the North East circle and any unfavourable developments in such regions could adversely affect the business, results of
operations and financial condition of the company.
(ii) A reduction in revenue it earn for our telecom services, due to regulatory ceilings on pricing, or owing to pricing pressure, reduction in average revenue per user (ARPU), can harm the financial health of the company.
(iii) Given the high churn rate in mobile telecommunications industry, the company cannot assure you that it will be able to retain all existing customers or that we will be successful in customer additions. Such a factor has the potential to hurt the business.

10. Listing DateBharti Hexacom shares are likely to list on the BSE and the NSE on Friday, April 14, 2024.

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