International brokerage Citi initiated coverage on Bharti Hexacom with a buy rating, as the midcap telecom player's growth outlook looks strong.
The brokerage issued a target price of Rs 1,405 per share with a 'buy' rating, indicating an upside of around 20 percent from the previous session's closing price.
Bharti Hexacom is a pure-play regional telecom operator with a healthy balance sheet. There is scope for further growth on the improved likelihood of tariff hikes. Citi also believes the firm has superior return ratios compared to peers. Additionally, the stock has outperformed, surging over 45 percent since its listing in April 2024.
Citi forecast a 3-year EBITDA CAGR of 26 percent for the company, compared to 20 percent and 22 percent for Bharti Aritel’s India and mobile operations, and 24 percent for Vodafone Idea.
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This growth is expected to drive a decline in net debt to EBITDA ratios, which are projected to fall to 0.9x by FY26 and 0.3x by FY27, primarily due to strong free cash flow generation. The declining net debt to EBITDA ratio is anticipated to create opportunities for increased payouts.
India's telecom sector, overall, is a positive play for the brokerage, as signs of waning competitive intensity make Citi bullish on the player.
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