Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Idea Cellular
RECO : SELL TP : Rs 60
Investment Rationale
§ Strong rebound in revenue growth supported by significant improvement in KPI’s has led to improvement in
revenues in last quarter. With the reduction in price war intensity in the domestic market, we believe the Idea
among one of the incumbents would benefit going forward.
§ As per the TRAI data Idea has been the net gainer from MNP till now. Also, it has won 3G licenses in circle
which generate ~83% of its total revenue, this could provide leverage to brand Idea for 3G expansion
§ The stock is under pressure due to regulatory uncertainties. In addition, one of the government body has also
recommended to impose fine of Rs30bn pertaining to Spice merger, due to which DoT has rejected the allocation
of 3G airwaves in Punjab circle
§ With the relaxation in M&A norms by regulator in NTP2011 could be positive for Idea as it an attractive target for
acquisition
§ Net debt / EBITDA to reduce from 3.5 in FY11E to 3.0x in FY12E, but it would remain at the higher levels.
Estimating strong revenue and EBIDTA CAGR of 34.6% and 25.8% respectively over FY10-12E
Valuations
§ At CMP of Rs68, the stock trades at 9.6x and 8.1x EV/EBIDTA and 26.9x and 28.7x EPS for FY11E and FY12E,
respectively. We maintain SELL rating on the stock with target price of Rs60. Relaxation in both M&A guidelines
and stringent recommendations made by TRAI in Feb, 2011, would be positive for the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Idea Cellular
RECO : SELL TP : Rs 60
Investment Rationale
§ Strong rebound in revenue growth supported by significant improvement in KPI’s has led to improvement in
revenues in last quarter. With the reduction in price war intensity in the domestic market, we believe the Idea
among one of the incumbents would benefit going forward.
§ As per the TRAI data Idea has been the net gainer from MNP till now. Also, it has won 3G licenses in circle
which generate ~83% of its total revenue, this could provide leverage to brand Idea for 3G expansion
§ The stock is under pressure due to regulatory uncertainties. In addition, one of the government body has also
recommended to impose fine of Rs30bn pertaining to Spice merger, due to which DoT has rejected the allocation
of 3G airwaves in Punjab circle
§ With the relaxation in M&A norms by regulator in NTP2011 could be positive for Idea as it an attractive target for
acquisition
§ Net debt / EBITDA to reduce from 3.5 in FY11E to 3.0x in FY12E, but it would remain at the higher levels.
Estimating strong revenue and EBIDTA CAGR of 34.6% and 25.8% respectively over FY10-12E
Valuations
§ At CMP of Rs68, the stock trades at 9.6x and 8.1x EV/EBIDTA and 26.9x and 28.7x EPS for FY11E and FY12E,
respectively. We maintain SELL rating on the stock with target price of Rs60. Relaxation in both M&A guidelines
and stringent recommendations made by TRAI in Feb, 2011, would be positive for the stock.
No comments:
Post a Comment