Reliance Communication - Non-wireless disappoints::Emkay

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Reliance Communication

Non-wireless disappoints

HOLD

CMP: Rs 77                                       Target Price: Rs 82

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n     Cons. Revenue at Rs49.4bn down 7.3% qoq, lower than our est. of Rs54.4bn. Wireless revenue up 3.1% but other business seg. reported qoq rev. decline of 12.6% to Rs22.9bn

n     EBITDA grew 1.6% qoq (adj. for IRU sales in Q4FY11), led by lower network opex & admin expenses. PAT at Rs1.57bn was down 6.7% qoq

n     ARPU decline of 3.3% qoq to Rs103 was inline with our expectations. MOU declined 3.3% qoq to 233 while RPM remains stable at Rs0.44. Wireless traffic was up 3.1% qoq

n     Based on the fare value & recent price correction we upgrade our rating on the stock to HOLD but maintain our cautious view. Valuations at 6.9x/ 5.7x EV/EBITDA for FY12E/13E