Bharti Hexacom: Airtel in a small pack
Subscribe to enjoy similar stories. Investors in Bharti Hexacom Ltd stock must be a happier lot vis-à-vis their counterparts in Bharti Airtel Ltd, the parent company holding a 70% stake in the former. Hexacom’s shares have gained as much as 66% since its listing day’s closing price of ₹813.30 apiece on 12 April 2024.
In comparison, the gains in Airtel’s shares over the same period stand at about half of that (up 34%). Both Bharti Airtel and Bharti Hexacom operate using the Airtel brand. Hexacom operates mobile and landline services in Rajasthan and North-East circles.
Now, there are two key factors why many brokerages, including Motilal Oswal Financial Services that has recently initiated coverage on the stock, have a positive view on Hexacom. First, it remains a pure play in the Indian telecom industry unlike Bharti Airtel, which has a global presence, especially in Africa. Second, lower capital misallocation concerns.
Bharti Airtel’s chairman has spoken about the possibility of overseas acquisitions in the medium term. If that happens, its investors would have reason to worry. After all, they have already waited a long time for a higher dividend payout.
Recall that Bharti Airtel’s Africa acquisition took a while to pay off. Hexacom has no such ambitions of acquisitions. Thus, its significantly improved free cash flow can be entirely available for dividend distribution.
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