Why is Bharti Hexacom Ltd falling/rising?

Recent Price Movement and Market Performance

Bharti Hexacom’s shares have been under pressure over the past week, registering a decline of 7.91%, significantly underperforming the Sensex benchmark, which fell by only 1.86% during the same period. Year-to-date, the stock has dropped by 9.87%, compared to a more modest 2.16% decline in the Sensex. This recent weakness is further underscored by the stock’s three-day consecutive fall, during which it lost 6.68% in value. Intraday trading on 14-Jan saw the stock touch a low of ₹1,624.80, marking a 3.25% drop from previous levels.

Technical indicators also point to bearish momentum. Bharti Hexacom is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning often signals short-term selling pressure and cautious investor sentiment.

Investor Participation and Liquidity

Interestingly, investor participation has increased despite the price decline. Delivery volumes on 13-Jan surged by 65.02% to 1.99 lakh shares compared to the five-day average, indicating heightened trading activity. The stock remains sufficiently liquid, with a trade size capacity of approximately ₹0.72 crore based on 2% of the five-day average traded value. This suggests that while selling pressure is evident, there is still active engagement from market participants.

Strong Financial Fundamentals Support Long-Term Outlook

Despite the recent price weakness, Bharti Hexacom’s underlying financials remain robust. The company has demonstrated healthy long-term growth, with operating profit expanding at an impressive annual rate of 147.86%. Profit after tax (PAT) for the latest six months stood at ₹812.80 crore, reflecting a substantial growth of 68.56%. Additionally, the operating profit to interest ratio reached a high of 8.01 times, indicating strong earnings relative to interest expenses. The debt-equity ratio remains conservative at 1.06 times, underscoring prudent financial management.

Bharti Hexacom has also maintained a consistent track record of positive results, having declared favourable earnings for five consecutive quarters. The majority shareholding by promoters further adds to the company’s stability and governance confidence.

Balancing Short-Term Volatility with Long-Term Potential

The current decline in Bharti Hexacom’s share price appears to be driven primarily by short-term market dynamics rather than fundamental weaknesses. The stock’s underperformance relative to the Sensex and sector peers over recent days suggests profit booking or cautious positioning by investors amid broader market volatility. However, the company’s strong earnings growth, solid operating metrics, and manageable debt levels provide a sound foundation for future performance.

Investors analysing Bharti Hexacom should weigh the recent price softness against its consistent financial track record and positive quarterly results. While the stock faces near-term headwinds reflected in technical indicators and price trends, its long-term growth trajectory remains intact, supported by robust profitability and prudent capital structure.

In summary, Bharti Hexacom’s share price decline as of 14-Jan is a reflection of short-term market pressures and technical selling rather than a deterioration in business fundamentals. The company’s healthy operating profit growth, strong PAT expansion, and low debt-equity ratio continue to underpin its investment appeal for those with a longer-term horizon.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →