Bharti Hexacom “Best Play” On Tariff Hikes, Jefferies Says; Upgrades To Buy, Lifts TP

Global brokerage Jefferies said Indian telecom operator Bharti Hexacom Ltd. is the “best play” on tariff hikes and upgraded the stock to Buy from Hold.

The brokerage also raised the stock’s base case target price to 1,600 rupees from 1,260 rupees per share. Bharti Hexacom closed at 1,291.05 rupees on the National Stock Exchange in Mumbai trading yesterday.

“Jio's rising focus on growth and VIL's (Vodafone Idea Ltd.) market share losses may need multiple tariff hikes over the next few years,” Jefferies said in an investor note.

The brokerage raised its FY26/FY27 mobile average revenue per user (ARPU) estimates by 6%-10%, as it now builds another 10% tariff hike in 2QFY26 in addition to the 10% tariff hike it was already modeling in 2QFY27.

It, however, cut its FY26/FY27 subscriber estimates by 1%-3%, as subscribers are more likely to consolidate their mobile usage at higher tariff levels.

“Over FY24-FY27, we expect Bharti Hexacom to deliver 19%/25% CAGRs in revenues/EBITDA,” Jefferies said, adding that strong EBITDA growth along with moderating capital expenditure could drive a 66% CAGR in its free cash flow to equity over FY24-FY27.

The brokerage said its base case target price of 1,600 rupees on Bharti Hexacom assumes cumulative tariff hikes of 40% over FY24-FY27.

Jefferies has a target price of 1,770 rupees on the stock, based on its upside scenario assumptions, which considers a cumulative tariff hike of 30% over FY25-FY27.

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