Idea Cellular- Upgrades continue, Upgrade to ACCUMULATE:Emkay

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Idea Cellular

Upgrades continue, Upgrade to ACCUMULATE

ACCUMULATE

CMP: Rs94                                        Target Price: Rs105

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n     Robust revenue growth of 6.8% qoq to Rs45.2bn v/s our estimate of Rs44.8bn. Strong rev. growth & decline in A&P spends qoq aided healthy EBITDA margin at 26.6%

n     EBIDTA at Rs12.0bn (our est. 10bn) and Q1FY12 PAT at Rs1.8bn (our est. Rs1.8bn). Higher interest and depreciation cost pertaining to 3G spectrum dented PAT

n     Robust 6.5% rise in traffic on network. ARPU declined to Rs160 v/s Rs 161 in Q4FY11. MOUs declined 1.5% to 391 v/s 397, while ARPM showed improvement of 1% qoq to Rs0.41

n     Valuations at 8.6x & 6.9x EV/EBIDTA for FY12E & FY13E respectively. Upgrade to ACCUMULATE from HOLD rating with revised target Rs105 (earlier Rs72)