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February 23, 2011
Idea Cellular Ltd. (IDEA.BO)
Research Tactical Idea
We believe the share price will rise relative to the country index over the next 60 days.
This is because the stock has traded off recently, making short term valuation much more compelling. We think the market
has over-reacted on regulatory concerns which include: 1) renewal charges; 2) extra Spectrum charges; and 3) ownership
of six overlapping circles post acquistion of Spice Communication. The stock is currently trading at one year forward
EV/EBITDA of 6.3x, Price to CEPS at 5.4x and Price to Book of 1.2x making valuation attractive, we believe.
We estimate that there is about a 60% to 70% or "likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Overweight
Industry View: Attractive
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
February 23, 2011
Idea Cellular Ltd. (IDEA.BO)
Research Tactical Idea
We believe the share price will rise relative to the country index over the next 60 days.
This is because the stock has traded off recently, making short term valuation much more compelling. We think the market
has over-reacted on regulatory concerns which include: 1) renewal charges; 2) extra Spectrum charges; and 3) ownership
of six overlapping circles post acquistion of Spice Communication. The stock is currently trading at one year forward
EV/EBITDA of 6.3x, Price to CEPS at 5.4x and Price to Book of 1.2x making valuation attractive, we believe.
We estimate that there is about a 60% to 70% or "likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Overweight
Industry View: Attractive
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