Emkay Global
Target: ₹1,550
CMP: ₹1,563.40
reported in-line results, with 2.3 per cent QoQ revenue growth to ₹2,410 crore and 1 per cent q-o-q EBITDA growth to ₹1,270 crore.
Revenue growth was led by Home Services (up 20.6 per cent QoQ) on strong subscriber additions, while Mobile Services grew only 1.6 per cent QoQ on a marginal decline in ARPU. The Mobile Services segment reported results in line with street estimates.
Capex elevated to ₹590 crore (₹340 crore in Q3FY26), largely toward Mobile Services, resulting in OFCF of ₹730 crore (₹940 crore in Q3FY26).
While Hexacom continues to execute well, lack of tariff hikes and increase in smartphone prices will weigh on ARPU growth. Heightened capex (₹160 crore), however, dragged cashflow (outflow of ₹110 crore). The company is prioritising Fiber over FWA (fixed wireless access), as chip prices have risen. However, the higher cost of connecting homes using Fiber in hilly terrains makes FWA inevitable.
We had earlier highlighted the street’s optimistic ARPU expectations (refer: Great operations, greater expectations). The street has started trimming FY28E ARPU estimates – ₹309 currently vs ₹327 in Aug-25.
We maintain Reduce and trim TP by about 9 per cent to ₹1,550 from ₹1,700. Higher-than-expected ARPU improvement, significant market-share gains from peers, and momentum in Home Services are key risks to our thesis.