BHARTIHEXA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.1

📊 Core Financials

• Quarterly PAT improved from 392 Cr. to 421 Cr. (+66.4% growth).
• ROE at 25.2% and ROCE at 17.4% indicate strong profitability and efficiency.
• Debt-to-equity ratio of 1.06 shows high leverage, though manageable given strong returns.
• Dividend yield at 0.56% provides modest shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 55.9 vs Industry PE of 51.2 → Slightly overvalued relative to peers.
• P/B Ratio: Current Price / Book Value ≈ 14.3 → Expensive relative to assets.
• PEG Ratio: 0.39 → Strong earnings growth potential at reasonable valuation.
• Intrinsic Value Zone: ₹1,650–₹1,720 (near DMA 200).

🏭 Business Model & Competitive Advantage

• Core operations in IT services, consulting, and digital transformation solutions.
• Strong client base across industries with global delivery capabilities.
• Competitive advantage lies in high ROE, diversified service offerings, and digital innovation.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive accumulation between ₹1,650–₹1,720.
• Long-Term Holding: Strong candidate for investors seeking exposure to IT services growth, but leverage risk remains.

✅ Positive

• High ROE (25.2%) and ROCE (17.4%) indicate strong profitability.
• PEG ratio of 0.39 suggests attractive growth potential.
• Consistent quarterly profit growth.
• Increase in DII holdings (+0.43%).

⚠️ Limitation

• High debt-to-equity ratio (1.06).
• P/B ratio of 14.3 suggests expensive valuation relative to assets.
• FII holdings declined (-0.39%).

📉 Company Negative News

• High leverage remains a concern for long-term sustainability.
• Decline in foreign institutional investor confidence.

📈 Company Positive News

• Quarterly PAT growth (421 Cr. vs 392 Cr.).
• Strong EPS at ₹30.8.
• Increase in domestic institutional investor holdings.

🌐 Industry

• IT services sector driven by digital transformation, cloud adoption, and consulting demand.
• Industry PE at 51.2 indicates sector is richly valued.
• Global demand for outsourcing and digital solutions supports long-term growth outlook.

🔎 Conclusion

• Bharti Hexacom shows strong profitability and growth potential but trades at a premium valuation.
• High leverage is a risk factor, though returns remain robust.
• Accumulation recommended near ₹1,650–₹1,720 for favorable long-term exposure to IT services growth.