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B e t t e r - t h a n - e x p e c t e d s h o w …
Idea’s Q4FY11 results were better than our estimates. It reported a topline
of | 4234.7 crore against our expectation of | 4176.6 crore, posting
growth of 7.1% QoQ and 26.5% YoY. The growth in the topline has been
primarily on the back of 9.4% sequential growth in the subscriber base to
89.5 million. The EBITDA stood at | 1075.2 crore (I-direct estimate: |
1010.4 crore), growing 13.4% QoQ and 16.4% YoY. The EBITDA margin
increased 142 bps QoQ to 25.4%, partly aided by one-time write-off of
network operating cost pertaining to previous quarters to the tune of |
38.0 crore. PAT for the quarter stood at | 274.5 crore (I-direct estimate: |
257.4 crore) growing 13% QoQ and 3% YoY. Idea capitalised interest cost
of | 124.0 crore pertaining to 3G related debt.
ƒ Highlights of the quarter
Idea reported a 4.2% dip (highest in the industry) in ARPU to | 161
from | 168 in Q3FY11. MoU stood at 397 minutes, falling 1% from
401 minutes in Q3FY11 while the ARPM declined 2.9% to 40.6 paisa
from 41.8 paisa in Q3FY11. The fall in metrics was compensated by
highest subscriber growth among peers at 9.4% (7.7 million) to 89.5
million subscribers. Total traffic grew 9.0% to 102.0 billion minutes.
Idea tweaked its depreciation policy (useful life of asset) resulting in
higher depreciation for the quarter increasing by 10.9% QoQ.
V a l u a t i o n
Idea surprised with better-than expected results both on the topline and
bottomline front. However, once the company starts charging interest
cost pertaining to 3G related debt and amortisation on 3G licenses to P&L,
profitability will take a severe hit. The overall liability arising out of notices
from DoT related to Spice licenses amounts to | 327.7 crore, which will
remain an overhang. At the CMP of | 73, the stock is valued at 30.1x
FY12E EPS. Our SOTP target price stands at | 73 (using DCF we have
arrived at a target price of | 59 for the core business and | 14 for Indus
contribution). On account of the recent run up in the stock, we have
downgraded the stock from BUY to HOLD.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B e t t e r - t h a n - e x p e c t e d s h o w …
Idea’s Q4FY11 results were better than our estimates. It reported a topline
of | 4234.7 crore against our expectation of | 4176.6 crore, posting
growth of 7.1% QoQ and 26.5% YoY. The growth in the topline has been
primarily on the back of 9.4% sequential growth in the subscriber base to
89.5 million. The EBITDA stood at | 1075.2 crore (I-direct estimate: |
1010.4 crore), growing 13.4% QoQ and 16.4% YoY. The EBITDA margin
increased 142 bps QoQ to 25.4%, partly aided by one-time write-off of
network operating cost pertaining to previous quarters to the tune of |
38.0 crore. PAT for the quarter stood at | 274.5 crore (I-direct estimate: |
257.4 crore) growing 13% QoQ and 3% YoY. Idea capitalised interest cost
of | 124.0 crore pertaining to 3G related debt.
ƒ Highlights of the quarter
Idea reported a 4.2% dip (highest in the industry) in ARPU to | 161
from | 168 in Q3FY11. MoU stood at 397 minutes, falling 1% from
401 minutes in Q3FY11 while the ARPM declined 2.9% to 40.6 paisa
from 41.8 paisa in Q3FY11. The fall in metrics was compensated by
highest subscriber growth among peers at 9.4% (7.7 million) to 89.5
million subscribers. Total traffic grew 9.0% to 102.0 billion minutes.
Idea tweaked its depreciation policy (useful life of asset) resulting in
higher depreciation for the quarter increasing by 10.9% QoQ.
V a l u a t i o n
Idea surprised with better-than expected results both on the topline and
bottomline front. However, once the company starts charging interest
cost pertaining to 3G related debt and amortisation on 3G licenses to P&L,
profitability will take a severe hit. The overall liability arising out of notices
from DoT related to Spice licenses amounts to | 327.7 crore, which will
remain an overhang. At the CMP of | 73, the stock is valued at 30.1x
FY12E EPS. Our SOTP target price stands at | 73 (using DCF we have
arrived at a target price of | 59 for the core business and | 14 for Indus
contribution). On account of the recent run up in the stock, we have
downgraded the stock from BUY to HOLD.
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