Bharti Hexacom commands 6% premium in grey market

Given the offer-for-sale nature of the issue, all the proceeds will be allotted to the selling shareholders in the company.

The share of Bharti Hexacom, the telephone and broadband services company and a subsidiary of Bharti Airtel, were trading with marginal gains of 6.6 percent in the grey market over the issue price of Rs 570.

The Rs 4,275-crore initial public offering (IPO) opens for subscription on April 3 in the Rs 542-Rs 570 price band.

The grey market is an unofficial ecosystem where shares are start trading much before the offer opens for subscription and continue to trade till the listing day. Most investors track the grey market premium to get an idea of the listing price.

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Bharti Hexacom issue is entirely an offer-for-sale (OFS) with Telecommunications Consultants India, the only public shareholder in the company, offloading 7.5 crore equity shares, or 15 percent stake. The promoter of the company is Bharti Airtel, which has a 70 percent stake.

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In FY23, the company's net profit declined 67.2 percent to Rs 549.2 crore for the previous year, on a higher base, including exceptional gains of Rs 1,951.1 crore. The company maintained decent topline figures and operating numbers. Revenue grew 21.7 percent.

Some key risks for the company are that it derives most of its revenue by providing mobile telephone services in Rajasthan and the Northeast circle and any unfavourable developments in these regions can adversely affect the business, results of operations and financial condition of the company.

The industry has a high churn rate, making it difficult for players to retain existing customers or bring in new customers.