2 Undervalued Telecom Service Stocks Trading Below Fair Value
- August 27, 2026
- Posted by: Kunal Singla
- Category: Market
Telecom service sector PE near 38.3-67.4. Bharti Airtel trades at 32.7x. Bharti Hexacom at 43.2x.
Quick Answer
Two telecom service stocks, Bharti Airtel and Bharti Hexacom, are trading below their respective sector average price to earnings ratios while both post strong return on equity. Bharti Hexacom, the regional mobile operator for Rajasthan and the North East circles, posts the higher return on equity of the two, while Bharti Airtel offers broader pan India scale. This gap between valuation and profitability is why these telecom service stocks stand out on a simple sector screen, though a formal buy rating needs deeper company specific research.
India’s telecom service industry provides mobile and broadband connectivity to hundreds of millions of subscribers, with earnings increasingly supported by rising average revenue per user following a series of industry wide tariff hikes. Not every stock in the space trades at the same multiple. A screen of listed telecom service stocks against their sector average price to earnings ratios surfaces two names still priced below that benchmark.
Bharti Airtel and Bharti Hexacom both currently trade below their respective industry PE benchmarks, while both post strong return on equity. This piece breaks down why each stock screens as undervalued, what the underlying financials show, and the risks that come with owning mobile telecom operators.
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Why These Telecom Service Stocks Screen as Undervalued
The telecom service industry currently carries average price to earnings ratios ranging from close to 38.3 times for pan India operators to close to 67.4 times for regional circle specific operators. A stock trading meaningfully below its own peer group average, while still posting strong positive return on equity, is a reasonable starting point for a relative valuation screen.
Both companies below clear that bar, with Bharti Hexacom standing out for the higher return on equity among these telecom service stocks, reflecting its concentrated circle level operations under the broader Bharti Airtel group.
The table below lists these two companies alongside their current price, valuation multiple and return ratios.
| Company | NSE Ticker | CMP (Rs) | PE Ratio | Sector PE | ROE | Market Cap (Rs Cr) |
|---|---|---|---|---|---|---|
| Bharti Airtel | BHARTIARTL | 1,903.00 | 32.65 | 38.31 | 17.91% | 11,88,815 |
| Bharti Hexacom | BHARTIHEXA | 1,564.70 | 43.23 | 67.38 | 24.19% | 78,853 |
Bharti Airtel: Pan India Scale
Bharti Airtel operates mobile, broadband and digital services across India and select international markets, ranking among the country’s largest telecom operators by subscriber base. The stock trades at a price to earnings ratio of 32.65, below the sector average of 38.31, at a current price of around Rs 1,903.
Return on equity of 17.91 percent is supported by a debt to equity ratio of 1.31, reflecting the capital intensive nature of network infrastructure. On an EPS of Rs 58.35 and book value of Rs 282.00, the price to book multiple works out to 6.76, alongside a dividend yield of 1.23 percent.
Bharti Hexacom: Higher ROE, Regional Circles
Bharti Hexacom operates mobile telecom services in the Rajasthan and North East India circles as part of the broader Bharti Airtel group structure. Its price to earnings ratio of 43.23 sits below its own sector average of 67.38, at a current share price of around Rs 1,565.
Return on equity of 24.19 percent is the highest of the two telecom service stocks in this list, and the debt to equity ratio of 0.86 is lower than Bharti Airtel. On an EPS of Rs 36.48 and book value of Rs 143.30, the price to book multiple of 11.00 is richer than Bharti Airtel, alongside a dividend yield of 1.78 percent, the higher of the two.
Valuation Snapshot: PE, PB and Dividend Yield
Beyond the headline price to earnings ratio, book value multiples and dividend yield highlight the different scale and structure of these two operators. Bharti Hexacom trades at a considerably richer price to book multiple, consistent with its higher return on equity as a more concentrated circle operator.
| Company | Price to Book | Book Value (Rs) | Dividend Yield | Debt to Equity |
|---|---|---|---|---|
| Bharti Airtel | 6.76 | 282.00 | 1.23% | 1.31 |
| Bharti Hexacom | 11.00 | 143.30 | 1.78% | 0.86 |
Bharti Hexacom pays a slightly higher dividend yield alongside lower leverage than Bharti Airtel, though it trades at a richer book value multiple reflecting its stronger return on equity and more concentrated circle level operations.
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Risks to Consider Before Buying These Telecom Service Stocks
A discount to the sector average price to earnings ratio does not remove company specific risk for telecom service stocks tied to tariff and competitive factors.
Tariff Hike Sustainability
Recent earnings growth for both operators has been supported by industry wide tariff hikes, and the pace of future increases may slow as average revenue per user approaches levels seen in more mature telecom markets.
Competitive Pressure from Financially Stressed Rivals
The Indian telecom industry includes at least one financially stressed operator, and any aggressive pricing response from that player to retain subscribers could pressure industry wide tariffs and profitability.
Capital Intensity of Network Investment
Both companies require continued heavy investment in network infrastructure, including 5G rollout, and elevated capital expenditure could pressure free cash flow even as revenue grows.
Regional Concentration Risk for Bharti Hexacom
Bharti Hexacom’s operations are concentrated in the Rajasthan and North East circles, making it more exposed to local competitive and regulatory dynamics than the broader pan India Bharti Airtel.
How to Track These Telecom Service Stocks
Investors evaluating these two names should track quarterly average revenue per user trends, subscriber additions, and how each sector average PE moves relative to each company’s own multiple over time, rather than relying on the valuation gap in isolation among telecom service stocks. Comparing these numbers regularly is the most reliable way to judge whether the discount to fair value remains intact or has already closed.
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Conclusion
Bharti Airtel and Bharti Hexacom are the two telecom service stocks currently trading below their respective sector average price to earnings ratios, while both post strong return on equity. That combination makes them worth a closer look for investors who already want exposure to India’s mobile telecom theme, though tariff sustainability and competitive pressure mean position sizing and diversification still matter when adding these names to a portfolio.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
FAQs on Undervalued Telecom Service Stocks
Which telecom service stocks are trading below their sector average PE?
Ans. Bharti Airtel and Bharti Hexacom are currently trading below their respective sector average price to earnings ratios, based on live NSE and BSE pricing.
Is Bharti Airtel undervalued compared to its sector?
Ans. Bharti Airtel trades at a price to earnings ratio of 32.65, below the sector average of 38.31, while delivering a return on equity of 17.91 percent.
Which of these telecom service stocks has the higher return on equity?
Ans. Bharti Hexacom has the higher return on equity of the two at 24.19 percent, compared with Bharti Airtel’s 17.91 percent.
What is the market capitalisation of Bharti Hexacom?
Ans. Bharti Hexacom has a market capitalisation of around Rs 78,853 crore, with a price to earnings ratio of 43.23 against its own sector average of 67.38.
What is the relationship between Bharti Airtel and Bharti Hexacom?
Ans. Bharti Hexacom operates mobile telecom services in the Rajasthan and North East India circles as part of the broader Bharti Airtel group structure, while Bharti Airtel operates across India and select international markets.
What are the main risks in undervalued telecom service stocks?
Ans. The main risks include the sustainability of recent tariff hikes, competitive pressure from financially stressed rivals, the capital intensity of ongoing network and 5G investment, and regional concentration risk for circle specific operators.
Is a low PE enough reason to buy a telecom service stock?
Ans. A price to earnings ratio below the sector average is a useful starting screen for telecom service stocks but not a standalone buy signal. Investors should also review average revenue per user trends, subscriber growth and capital expenditure plans before investing.
