Moneycontrol
May 17, 2017 01:51 PM IST | Source: Moneycontrol.com

Buy Idea Cellular; target of Rs 110: Motilal Oswal

Motilal Oswal is bullish on Idea Cellular has recommended buy rating on the stock with a target price of Rs 110 in its research report dated May 15, 2017.

Buy Idea Cellular; target of Rs 110: Motilal Oswal

Motilal Oswal's research report on Idea Cellular


Idea’s (IDEA) revenues declined 6%/14% QoQ/YoY to INR 81.3b (in-line). EBITDA surprisingly grew 1% QoQ (-39% YoY) to INR 21.9b (higher than est. of INR 18.5b). It majorly benefited from lower network cost (-5% QoQ) on the back of 900 2G site reduction and other cost optimization measures.


Outlook


We maintain Buy with a revised TP of INR 110 on 10x FY19E EV/EBITDA, which partly captures gains from Vodafone merger. However, until the merger gets fructified, the stock could languish due to likely market share dilution in a hyper competitive industry outlook triggered by high capacity requirements.


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