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Bharti Hexacom IPO opens today: GMP, subscription status, verification and other important details. Should you register or not?

Bharti Hexacom's IPO has been set for subscription today (Wednesday, April 3) and closes on Friday, April 5. The price range for Bharti Hexacom's IPO has been set at the range of 542 to 570 per piece of face value of 5. On Tuesday the arm of Bharti Aitel was collected 1,924 crore from the anchor investors. 26 shares form one lot for the IPO of Bharti Hexacom, thereafter a multiple of 26 shares. FY25 begins with the IPO of Bharti Hexacom in the primary market.

A minimum of 75% of the offering is reserved for qualified institutional buyers (QIB), a maximum of 15% of the offering is reserved for non-institutional institutional investors (NII) and a maximum of 10% of the offering is reserved for retail investors.

Also Read: Bharti Hexacom IPO: Subsidiary of Bharti Airtel increased 1,924 crore from anchor investors before the IPO

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Bharti Hexacom IPO details.

The Bharti Airtel subsidiary provides communications solutions to customers in Rajasthan and the Indian states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura, as well as to telecom circles in the Northeast. The company offers landline telephone, Internet and cellular services to its customers. The company offers its services under the name “Airtel”.

The company's listed competitors include Bharti Airtel Ltd., according to Red Herring Prospectus (RHP). (P/E ratio of 82.16), Vodafone Idea Ltd. (P/E ratio of (1.63)) and Reliance Jio Infocomm Ltd.

Also Read: Bharti Hexacom IPO to open tomorrow; Here are 5 factors to consider before investing

Arun Kejriwal, the founder of Kejriwal Research and Investment Services, highlighted the key difference between the parent company and its subsidiary Bharti Hexacom. Bharti Airtel owns 70% of the company while the Indian government controls the other 30%.

What differentiates the two is that Bharti Airtel is a global and pan-India player. Except Assam, this company (Bharti Hexacom) is present only in Rajasthan and six other northeastern states. There are significant differences between Bharti Airtel and this company, Kejriwal explained.

“However, the business model is similar beyond that. On the valuation side, if you look at the P/E ratio and the other factors, this works out to be around a 12-15% discount to the price of Bharati Airtel. So 12-15% is a fair discount you can expect. Secondly, Bharti Airtel is trading at a lifetime high. If a stock is currently at a lifetime high, that means there is some performance; otherwise it wouldn't be so high. That is the crucial difference,” said Arun.

Also Read: Bharti Hexacom IPO: From price range to GMP: Here are 10 things you should know before subscribing

Bharti Hexacom IPO details

The company's Red Herring prospectus states that Bharti Hexacom's IPO consists of an offer-for-sale (OFS) only and has no new issue component. Telecommunications Consultants India, the company's sole selling shareholder, plans to sell 7.5 crore shares or 15% of OFS.

According to the draft Red Herring Prospectus (DRHP) of the government-controlled company, Telecommunications Consultants had initially planned to offer up to 10 crore shares.

The underwriters of Bharti Hexacom's IPO are SBI Capital Markets Limited, Axis Capital Limited, Bob Capital Markets Limited, ICICI Securities Limited and IIFL Securities Ltd. The registrar of the issue is Kfin Technologies Limited.

Also Read: Bharti Hexacom IPO: Company explains reason for reducing issue size

Evaluating Bharti Hexacom IPO

Choice Equity Broking Pvt Ltd

As for the brokerage business, Bharti Hexacom, promoted by Bharti Airtel, benefits from the synergies arising from the partnership with Bharti Airtel and its subsidiaries.

By leveraging the duopoly structure, Bharti Hexacom was able to significantly improve its operational and financial performance through a series of rate hikes starting November 2021. The brokerage firm expects the company's operating and financial performance to continue to improve in the medium term despite greater entry barriers for new competitors, continued investment needs and rising spectrum costs.

“At a higher price level, BHL requires an EV/TTM sales multiple of 5.4x, which corresponds to a discount of 6.5x compared to the comparable average. In line with the peer average of 3.9x. So, taking into account the above observations, we are in the process of assigning a “SUBSCRIBE” rating to the issue,” the brokerage firm said.

Way2Wealth Brokers Pvt Ltd

The brokerage firm said that TCIL, a government of India company, is getting a partial exit to determine price and stock market benefits, the management statement said. This may be the first IPO of its kind where an Indian entity will use the OFS mode to dilute its holdings to determine company value. This IPO also shows that the company does not currently require any additional financing to achieve its planned expansion.

“Based on FY9 2024 earnings, the issue appears to be fully priced in. The company enjoys virtual leadership in the telecommunications circles in which it operates and is confident of maintaining leadership. Investors can sign up for medium to long-term rewards,” the brokerage firm said.

Bharti Hexacom IPO GMP today

Bharti Hexacom IPO GMP or gray market premium is +52. This suggests that Bharti Hexacom's share price was trading at a premium of 52 on the gray market, according to investorgain.com.

The Bharti Hexacom shares were expected to list at a price of 622 per share, which is 9.12% higher than the IPO price of 570 considering the upper end of the IPO price range and the current gray market premium.

Gray market activity over the last 12 sessions suggests that IPO GMP is on the rise and a robust listing is expected. According to analysts at investorgain.com, the lowest GMP is 30, and the maximum GMP is 65.

“Gray market premium” indicates investors’ willingness to pay more than the issue price.

Also Read: Bharti Hexacom IPO expected to launch in April, aims for higher valuation 28,000 crore: report

Disclaimer: The above views and recommendations are those of individual analysts, experts and brokerage firms, not Mint. We recommend investors consult certified experts before making an investment decision.

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