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O p e r a t i o n a l p e r f o rm a n c e d i s a p p o i n t s …
RCom reported its Q1FY12 numbers, which were below our expectations
on the operation front. Revenues for the quarter stood at | 4849.1 crore
against our expectation of | 5341.5 crore, de-growing 9.1% QoQ from
revenues of Q4FY11, adjusted for one-time IRU income from overseas
cable of | 2545 crore, at | 5331.1 crore. EBITDA for the quarter stood at |
1511.0 crore against our expectation of | 1631.0 crore. The EBITDA
margin for the quarter stood at 31.2%, improving from an adjusted
EBITDA margin of 23.8% in Q4FY11 primarily due to lower subscriber
acquisition cost. However, on the bottomline front, the company reported
better numbers. Net profit for the quarter stood at | 157.4 crore against
our expectation of | 53.2 crore primarily due to a lower-than-expected
depreciation (| 976.0 crore against our expectation of | 1132.0 crore) and
interest (| 405.0 crore against our expectation of | 530.4 crore) cost. The
company did not amortise the 3G spectrum fees, which continued to
remain in CWIP, leading to a lower-than-expected amortisation cost.
ƒ Highlights for the quarter
Like Q4FY11, Q1FY12 was marked by relatively lesser deterioration of
key metrics for RCom as compared to quarters prior to Q4FY11. ARPU
continued its trend of falling, to stand at | 103, down 3.7% from | 107
in Q4FY11. MoU declined 3.3% to 233 while ARPM remained stable at
44 paisa. Overall traffic on the network grew 3.1% QoQ to 97.3 billion
minutes.
V a l u a t i o n
The company reported rather dismal numbers for Q1FY12 with topline de
growing by 7.3% QoQ. RCom has reduced its capex guidance significantly
to ~| 1500 crore. RCom would capitalise 3G spectrum fees in FY12, which
would increase the amortisation, going forward. Recently, RCom
refinanced the high cost 3G debt with ECB from China Development Bank
to address the debt concerns. At the CMP of | 76, the stock is trading at
18.8x FY12E EPS of | 4.1 and 13.3x FY13E EPS of | 5.8. We have valued
the stock using DCF methodology and arrived at a target price of | 84,
assuming 6.5% CAGR in revenue over FY11E–FY20E and terminal growth
rate of 3%. We maintain our HOLD rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
O p e r a t i o n a l p e r f o rm a n c e d i s a p p o i n t s …
RCom reported its Q1FY12 numbers, which were below our expectations
on the operation front. Revenues for the quarter stood at | 4849.1 crore
against our expectation of | 5341.5 crore, de-growing 9.1% QoQ from
revenues of Q4FY11, adjusted for one-time IRU income from overseas
cable of | 2545 crore, at | 5331.1 crore. EBITDA for the quarter stood at |
1511.0 crore against our expectation of | 1631.0 crore. The EBITDA
margin for the quarter stood at 31.2%, improving from an adjusted
EBITDA margin of 23.8% in Q4FY11 primarily due to lower subscriber
acquisition cost. However, on the bottomline front, the company reported
better numbers. Net profit for the quarter stood at | 157.4 crore against
our expectation of | 53.2 crore primarily due to a lower-than-expected
depreciation (| 976.0 crore against our expectation of | 1132.0 crore) and
interest (| 405.0 crore against our expectation of | 530.4 crore) cost. The
company did not amortise the 3G spectrum fees, which continued to
remain in CWIP, leading to a lower-than-expected amortisation cost.
ƒ Highlights for the quarter
Like Q4FY11, Q1FY12 was marked by relatively lesser deterioration of
key metrics for RCom as compared to quarters prior to Q4FY11. ARPU
continued its trend of falling, to stand at | 103, down 3.7% from | 107
in Q4FY11. MoU declined 3.3% to 233 while ARPM remained stable at
44 paisa. Overall traffic on the network grew 3.1% QoQ to 97.3 billion
minutes.
V a l u a t i o n
The company reported rather dismal numbers for Q1FY12 with topline de
growing by 7.3% QoQ. RCom has reduced its capex guidance significantly
to ~| 1500 crore. RCom would capitalise 3G spectrum fees in FY12, which
would increase the amortisation, going forward. Recently, RCom
refinanced the high cost 3G debt with ECB from China Development Bank
to address the debt concerns. At the CMP of | 76, the stock is trading at
18.8x FY12E EPS of | 4.1 and 13.3x FY13E EPS of | 5.8. We have valued
the stock using DCF methodology and arrived at a target price of | 84,
assuming 6.5% CAGR in revenue over FY11E–FY20E and terminal growth
rate of 3%. We maintain our HOLD rating on the stock.
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