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Motilal Oswal Downgrades Bharti Hexacom to Neutral Over Valuation Premium

The downgrade reflects concern over a 37% EV/EBITDA premium to Bharti Airtel coupled with operational constraints from the government’s 15% stake.

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Motilal Oswal downgrades Bharti Hexacom to neutral; check commentary & latest price target

Overview

  • On June 6, Motilal Oswal cut its rating to Neutral and set a target price of ₹1,900, citing a 37% premium in one-year forward EV/EBITDA compared to Bharti Airtel’s Indian business.
  • The downgrade sent Bharti Hexacom shares down more than 4%, trading near ₹1,800 after peaking at a 52-week high of ₹1,938 on June 4.
  • The firm highlighted that the government’s 15% stake could hamper strategic moves and create a supply overhang when divested.
  • Bharti Hexacom is projected to become net debt-free by fiscal 2027 with free cash flow rising toward ₹30 billion and dividends increasing to ₹30 per share.
  • Analysts warn that any merger with Bharti Airtel carries the risk of an unfavorable swap ratio for Hexacom shareholders, reflecting potential consolidation pressures.