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T r a f f i c g r o w s ; s o d o e s A R PM …
Reliance Communications reported its Q2FY12 numbers that were slightly
below our expectations on the topline front. Revenues for the quarter
stood at | 4792.2 crore vs. our expectation of | 4854.1 crore, de-growing
1.2% QoQ, representing a seasonally weak quarter. The EBITDA for the
quarter stood at | 1357.1 crore against our expectation of | 1492.8 crore,
de-growing 10.2% QoQ owing to higher ad expenses. The EBITDA
margin for the quarter stood at 28.3% falling 284 bps QoQ. However, on
the bottomline front, the company reported better-than-expected
numbers. Net profit for the quarter stood at | 252.1 crore vs. our
expectation of | 199.9 crore primarily due to higher other income, which
stood at | 248 crore against our expectation of | 100 crore.
Highlights of the quarter
Even in a seasonally weak quarter, RCom managed to grow the traffic on
its network unlike its peers. Traffic on network improved by1.6% to 98.9
billion minutes. ARPM also improved in this quarter to stand at 45 paisa
as compared to 44 paisa in Q1FY12. ARPU and MoU, however, declined
QoQ from | 103 and 233 to | 101 and 227, respectively. The company
added 3.8 million wireless subscribers in this quarter.
V a l u a t i o n
In spite of being a seasonally weak quarter, the company registered a
growth in both traffic as well as ARPM. However, the depreciation and
amortisation cost along with the interest cost still do not reflect the full
quarter effect of 3G related debt. Hence, going forward, we expect these
costs to rise, thus keeping margins and profitability under pressure. At the
CMP of | 82, the stock is trading at 26.6x FY12E EPS of | 3.1 and 22.7x
FY13E EPS of | 3.6. We have valued the stock using the DCF
methodology, assuming 5.5% CAGR in revenue over FY11E-FY20E and
terminal growth rate of 3% thereon. We maintain our target price of | 84.
We continue to rate the stock as HOLD.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
T r a f f i c g r o w s ; s o d o e s A R PM …
Reliance Communications reported its Q2FY12 numbers that were slightly
below our expectations on the topline front. Revenues for the quarter
stood at | 4792.2 crore vs. our expectation of | 4854.1 crore, de-growing
1.2% QoQ, representing a seasonally weak quarter. The EBITDA for the
quarter stood at | 1357.1 crore against our expectation of | 1492.8 crore,
de-growing 10.2% QoQ owing to higher ad expenses. The EBITDA
margin for the quarter stood at 28.3% falling 284 bps QoQ. However, on
the bottomline front, the company reported better-than-expected
numbers. Net profit for the quarter stood at | 252.1 crore vs. our
expectation of | 199.9 crore primarily due to higher other income, which
stood at | 248 crore against our expectation of | 100 crore.
Highlights of the quarter
Even in a seasonally weak quarter, RCom managed to grow the traffic on
its network unlike its peers. Traffic on network improved by1.6% to 98.9
billion minutes. ARPM also improved in this quarter to stand at 45 paisa
as compared to 44 paisa in Q1FY12. ARPU and MoU, however, declined
QoQ from | 103 and 233 to | 101 and 227, respectively. The company
added 3.8 million wireless subscribers in this quarter.
V a l u a t i o n
In spite of being a seasonally weak quarter, the company registered a
growth in both traffic as well as ARPM. However, the depreciation and
amortisation cost along with the interest cost still do not reflect the full
quarter effect of 3G related debt. Hence, going forward, we expect these
costs to rise, thus keeping margins and profitability under pressure. At the
CMP of | 82, the stock is trading at 26.6x FY12E EPS of | 3.1 and 22.7x
FY13E EPS of | 3.6. We have valued the stock using the DCF
methodology, assuming 5.5% CAGR in revenue over FY11E-FY20E and
terminal growth rate of 3% thereon. We maintain our target price of | 84.
We continue to rate the stock as HOLD.
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