Bharti Hexacom shares downgraded by CLSA who sees more downside after Q1 results

Global brokerage firm CLSA downgraded shares on Bharti Hexacom Ltd. to ‘Underperform’ on Wednesday, August 6, following the Bharti Airtel unit’s Q1 FY26 earnings report, which came in below expectations.The brokerage has a price target of ₹1,525 per share on the stock, implying a potential downside of 18% from the current market levels.

Bharti Hexacom’s revenue stood at ₹2,260 crore, down 1% quarter-on-quarter, but up 18% year-on-year, below estimates.

ARPU (average revenue per user) rose to ₹246, up 2% QoQ and 20% YoY, which was 18% higher than Reliance Jio.The home broadband segment added 54,000 subscribers, its highest-ever net addition, taking the total to 502,000. However, this segment accounts for just 3% of total revenue.

EBITDA came in at ₹1,160 crore, down 1% QoQ but up 33% YoY, again missing estimates.

Free cash flow (FCF) for the quarter stood at ₹850 crore ($100 million) after ₹230 crore ($27 million) in capex; net debt to EBITDA ratio remained low at 1.3x.The stock is currently trading at 15x FY27CL EV/EBITDA, implying a 40% premium to Bharti Airtel.

Despite the downgrade from CLSA, Jefferies remains bullish on Bharti Hexacom with a ‘Buy’ rating and a price target of ₹2,250.

The brokerage said that underlying revenues were in line, but profitability missed expectations due to higher network and other costs.

The brokerage has cut estimates by 1-3%, but still expects strong compound annual growth rates (CAGR) of 24% in EBITDA and 29% in FCF over FY25-28E.

Jefferies also said that Bharti Hexacom’s stronger growth compared to Bharti Airtel will continue to justify its valuation premium.

Shares of Bharti Hexacom settled 0.19% lower on Tuesday at ₹1,855.40. The stock has risen over 40% so far in 2025.