On Wednesday, ICICI Securities increased its price target on Bharti Hexacom (BHARTIHE:IN), a regional telecommunications provider, to INR 1,150 from INR 1,075, while keeping an 'Add' rating on the stock.
This adjustment comes in the wake of the company's first-quarter financial results for the fiscal year 2025, which showed a revenue increase and strong free cash flow generation.
Bharti Hexacom reported a 2.3% quarter-over-quarter (QoQ) rise in revenue to INR 19 billion, which aligned with the estimates of ICICI Securities. However, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for Indian Accounting Standards (Ind AS), fell by 1.7% QoQ to INR 7.3 billion.
The decline was attributed to a significant increase in costs, including the full booking of 5G-related expenses and one-time charges in selling, general, and administrative (SG&A) expenses.
Despite the EBITDA miss, Bharti Hexacom demonstrated robust free cash flow (FCF) generation post-finance costs, amounting to INR 5.9 billion. This performance was partly supported by a release of INR 4.45 billion in working capital. Additionally, the company's net debt decreased by INR 5.75 billion to INR 40 billion, reflecting a healthy financial position.
The securities firm also noted that it has raised its earnings per share (EPS) estimates for Bharti Hexacom by 2-7%, considering an earlier-than-anticipated increase in tariffs.
The revised price target reflects an updated fiscal year 2026 enterprise value to EBITDA (EV/EBITDA) multiple of 14x, up from the previous 13.5x. The firm's outlook suggests that cost inflation for Bharti Hexacom may moderate in the future, which could further improve the company's financial health.
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