Edelweiss recommended hold rating on Idea Cellular with a target price of Rs 95 in its research report dated May 15, 2017.
Edelweiss' research report on Idea Cellular
Idea Cellular (Idea) reported 6.2% QoQ revenue decline (Street estimate 5.0% QoQ decline) to INR 81.3bn as voice and data realisations plunged impacted by heightened competition. However, EBITDA margin spurted by 200bps to 27.0% on cost rationalistion and forex gains. Idea guided for INR 60bn capex in FY18, versus actual capex of INR 78bn in FY17.
Management highlighted they are looking at active infrastructure sharing arrangement with 2-3 operators, which can significantly lower network costs and capex. As competitive intensity will keep industry revenue growth under pressure, we expect companies to adopt significant cost cutting measures. Maintain ‘HOLD’ with DCF -based target price of INR 95.
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