Bharti Hexacom Shares Fall 3% After Downgrade by Motilal Oswal: Here’s What Happened

Bharti Hexacom, the telecom company that operates under the Airtel brand in Rajasthan and the North East, saw its stock price fall by about 3% today. The drop came right after leading brokerage Motilal Oswal changed its rating on the company from ‘Buy’ to ‘Neutral’.

Why Did Motilal Oswal Change Its View?

Motilal Oswal, a well-known investment and research firm, said that Bharti Hexacom’s shares are getting too expensive compared to what the company is earning. In investor terms, they’re saying the stock has a “steep valuation premium.”

That just means the stock is priced much higher than its actual value — at least in their view.

Even though Bharti Hexacom has been performing well, Motilal Oswal thinks there may not be much room left for the stock to grow in the near term because it’s already priced high. So they changed their recommendation to “neutral,” meaning they think the stock might not move much either way for now.

The Numbers Behind It

According to Motilal Oswal, Bharti Hexacom is trading at about 14.4 times its expected earnings — that’s quite high. In fact, it’s even more expensive than its parent company Bharti Airtel’s India business.

Simply put, the stock is running ahead of itself. Investors have priced in a lot of future growth, and that could make it harder for the stock to rise more unless something really big changes.

But It’s Not All Bad News

Even though they downgraded the stock, Motilal Oswal still believes that Bharti Hexacom has a lot of potential. The company operates in areas that still don’t have a lot of internet users or mobile connections — places like rural Rajasthan and parts of the North East.

That means there’s room to grow, especially as more people get access to smartphones, mobile data, and broadband. The company is also expected to do well in wired internet through its Fixed Wireless Access (FWA) services — basically a new way to get high-speed internet to homes without digging up roads for cables.

A Quick Look at the Company’s Performance

Earlier this year, Bharti Hexacom reported some strong results:

• Its profit more than doubled, rising by over 100% to ₹511 crore.

• Revenue also jumped more than 13%, showing strong customer demand.

The company has also been getting more premium customers, meaning people who use more data, subscribe to postpaid plans, or upgrade from regular calls to mobile internet. This is helping improve its ARPU (Average Revenue Per User), a key number for telecom companies.

So, What’s the Takeaway?

Bharti Hexacom is doing well, and people still believe in its long-term story. But for now, some experts feel the stock may have gone a little too far, too fast. So the dip in the share price today is more about market expectations than company problems.

It’s kind of like when a really good movie gets hyped up so much that it’s hard to live up to the expectations — even if the movie is actually great.