Bharti Hexacom shares drop over 3% on Q2 miss; should you buy the dip?

Analysts caution that since its listing, Bharti Hexacom share price has re-rated significantly. They feel such a sharp premium to Bharti Airtel's more diversified business is too steep

Bharti Hexacom share price fell over 3 per cent on the BSE on Thursday, after analysts flagged valuation concerns for the stock. Though the company posted a slight miss in results for the September quarter (Q2) of the current financial year (FY26), they said the stock has seen multiple re-rating since listing, making the premium valuations “unjustified”.

 

"Since its listing, Bharti Hexacom stock has re-rated significantly and now trades at roughly 17.5x one-year forward EV/Ebitda (around 25 per cent premium to Bharti's India business (ex-Indus Towers). We find such a sharp premium to Bharti’s more diversified business to be too steep and do not find the risk-reward attractive for BHL shareholders," said analysts at Motilal Oswal Financial Services.

 

On the bourses, the Bharti Hexacom stock dropped 3.5 per cent to an intraday low of ₹1,808.35 per share. At 2:10 PM, the stock was down 3.2 per cent at ₹1,814 per share as against a 0.09 per cent dip in the BSE Sensex index. Since its stock market debut in April 2024, the stock has surged more than 100 per cent.  FOLLOW LATEST STOCK MARKET UPDATES LIVE

Bharti Hexacom Q2 results highlights

• Bharti Hexacom's consoldiated revenue rose 11 per cent year-on-year (Y-o-Y) and 2.4 per cent quarter-on-quarter (Q-o-Q) to ₹2320 crore in Q2FY26, with customer revenue rising 2 per cent Q-o-Q to ₹2200 crore. 
• The company's underlying sequential wireless revenue growth came at 2.1 per cent, which was weaker compared to peers (3 per cent Q-o-Q growth for Reliance Jio, including FTTH and Airtel’s India wireless) driven by subscriber base decline (pronounced seasonality in BHL circles). 
• Bharti Hexacom's Ebitda increased by 21 per cent Y-o-Y and 4 per cent Q-o-Q to ₹1210 crore. It missed estimates due to higher network opex (up 11 per cent Y-o-Y). 
• BHL's reported Ebitda margin expanded ~85bp Q-o-Q to 52.1 per cent (435bp Y-o-Y), but stayed below estimates. 
• Bharti Hexacom's Q2FY26 net profit was ₹420 crore, up 8 per cent Q-o-Q and 66 per cent Y-o-Y, but still below estimates due to Ebitda miss. 
• BHL's overall capex surged Q-o-Q to ₹370 crore (down 8 per cent Y-o-Y). 
• Its consolidated free cash flow (after leases and interest payments) moderated Q-o-Q to ₹440 crore (vs ₹890 crore in Q1FY26) due to higher capex and actual interest outgo. 

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Bharti Hexacom stock: Time to sell?

Motilal Oswal Financial Services | Maintained 'Neutral' | Target price increased: ₹1,975

The brokerage has cut its FY26-28 Ebitda estimates by 1-2 per cent and model a CAGR of 12 per cent and 20 per cent in BHL’s revenue and Ebitda over FY25-28E, driven by 15 per cent tariff hike from December 2025, ramp-up of FWA offerings and continued market share gains.

 

It values the stock at EV/Ebitda valuation of 14.1x, based on December 2027 estimates. This implies a 10 per cent premium to the brokerage’s multiple for Bharti’s India wireless business.

JM Financial | Maintained 'Buy' | Target raised: ₹2,195

The brokerage has marginally raised its FY26-28 Ebitda estimate by around 1 per cent, accounting for slightly lower opex.. The brokerage believes the industry’s wireless ARPU (average revenue per user) will grow at 13 per cent CAGR in the next 3-5 years, driven by regular tariff hike and multiple premiumisation strategies. Further, there is improved visibility over the next tariff hike of around 15 per cent in the next few months (and regular tariff hikes thereafter) due to Jio’s likely IPO by H1CY26, coupled with the government's intent to ensure a '3+1' player market.

 

That apart, the potential 5G monetisation and FWA rollout provides significant upside risk over the long term. There is also a huge FCF generation potential over the next 4-5 years with the next big jump in capex, mostly related to 6G, which is the most likely 2030 onwards story.

Emkay Global Financial Services | Maintains 'Reduce' | Target price maintained: ₹1,800

The brokerage believes that, against the consensus estimate of 12.6 per cent ARPU CAGR over FY25-28, Bharti Hexacom may see 10 per cent ARPU CAGR, considering a large part of tariff repair is already behind. Thus, ARPU growth momentum will slow down. Further, while it likes the business, it sees the risk-reward as unfavorable, given the optimistic growth expectations and expensive valuations.