Bharti Hexacom: Tariff Hike Delays vs. Jefferies' 69% Upside

Introduction

Shares of Bharti Hexacom Ltd. have been under significant pressure throughout the calendar year 2026, even as the stock saw a minor recovery in the third week of March. The primary concern weighing on investor sentiment is the potential for delays in crucial tariff hikes, which has led to downward revisions in earnings estimates. Despite these near-term challenges, global brokerage firm Jefferies remains optimistic, outlining a bullish scenario that could see the stock surge by nearly 69%.

Stock Performance in 2026

So far in 2026, Bharti Hexacom's stock has declined by approximately 16%, significantly underperforming the benchmark Nifty 50 index, which has seen a more modest fall of around 5% during the same period. This weakness persists despite a three-day winning streak in mid-March, highlighting the deep-seated concerns among investors. The stock's current market price as of March 17, 2026, stands at ₹1,547.70, reflecting a 1.09% gain on the day but still down about 15% for the year.

The Tariff Hike Dilemma

The telecommunications sector has been anticipating a round of tariff increases to improve profitability and average revenue per user (ARPU). However, the likelihood of a headline tariff hike by June 2026 is now considered low. Jefferies points to geopolitical risks, specifically the ongoing crisis in the Middle East, as a key factor that could drive up inflation. Higher inflation would limit the ability of telecom operators like Bharti Hexacom to increase prices without impacting their subscriber base. Factoring in this risk, the brokerage has adjusted its forecast to a single 15% tariff hike in December 2026, spread across the financial years 2026 to 2028.

Jefferies' Analyst Scenarios

Jefferies has maintained a 'Buy' rating on Bharti Hexacom but has revised its base-case price target downwards to ₹1,880 from a previous target of ₹2,110. This new target still implies a potential upside of about 27% from current levels and is based on a valuation of 14 times enterprise value to EBITDA. The brokerage has laid out three distinct scenarios for the stock's performance:

• Bull Case: A price target of ₹2,510, representing a 69% upside. This scenario assumes cumulative tariff hikes of 30% over the financial years 2027 and 2028.
• Base Case: The official target of ₹1,880, with a 27% upside, based on more moderate tariff adjustments.
• Downside Case: A potential fall to ₹1,270, indicating a 14% decline. This would occur in the absence of any tariff hikes during the same period.

Despite the near-term headwinds, Jefferies believes Bharti Hexacom remains one of the best vehicles to capitalize on India's eventual tariff repair story, viewing the current risk-reward ratio as attractive for investors.

Impact on Earnings Estimates

The anticipated delay in tariff hikes has prompted analysts to revise their financial projections. Jefferies has cut its consensus earnings per share (EPS) estimates for Bharti Hexacom by 4-5% for the financial years FY27 and FY28. This adjustment reflects the moderated revenue growth expected in the absence of timely price increases. However, the long-term growth outlook remains robust, supported by strong fundamentals and market position.

Future Growth Projections

Bharti Hexacom is forecast to deliver strong financial performance over the next few years. The company's earnings and revenue are projected to grow by 33.6% and 12% per annum, respectively. This growth is expected to outpace the broader Indian market. Furthermore, its return on equity is forecast to reach a healthy 35.4% in three years.

This strong growth trajectory, combined with moderating capital expenditure, is expected to drive a 66% compound annual growth rate (CAGR) in its free cash flow to equity (FCFE) between FY24 and FY27.

Analyst Consensus and Market View

The broader analyst community holds a generally positive view on Bharti Hexacom. Out of 13 analysts tracking the company, eight have issued a 'Buy' rating, two recommend a 'Hold', and three have a 'Sell' rating. This indicates that while concerns exist, the majority of market experts believe in the company's long-term potential. Some analysts note that Bharti Hexacom trades at a premium to its parent company, Bharti Airtel, but justify this with its faster growth profile and higher return on capital.

Conclusion

Bharti Hexacom is currently navigating a challenging period marked by uncertainty over tariff hikes and subsequent earnings downgrades. The stock's performance in 2026 reflects these concerns. However, the underlying growth story remains intact, with strong forecasts for earnings, revenue, and free cash flow generation. Jefferies' analysis highlights the significant potential upside if the tariff environment improves, making it a stock to watch for investors with a long-term perspective on the Indian telecom sector.