Angel Broking has maintained neutral rating on Reliance Communications, in its May 28, 2012 research report.
Angel Broking has maintained neutral rating on Reliance Communications , in its May 28, 2012 research report.
“For 4QFY2012, Reliance Communication (RCom) reported modest revenue growth but stood weak on the operational front due to a 23% qoq increase in network-related expenses on the back of some lumpy maintenance expenses during the quarter. Despite hiking voice tariffs for GSM as well as CDMA subscribers, average revenue per user (ARPM) of the company witnessed 2.2% qoq reduction because of increased competitive intensity in the industry. Due to lack of triggers except the monetization of its Infratel business or listing of cable business in Singapore, which can cut down its debt by more than half, we remain Neutral on the stock.”
“RCom reported revenue of Rs5,310cr, up 5.0% qoq. Wireless revenue came in at Rs4,506cr, up 1.3% qoq on the back of qoq 1.3% qoq growth in MOU to 227 min. ARPU slipped by 1.0% qoq to Rs99 in 4QFY2012 from Rs100 in 3QFY2012. Overall EBITDA margin declined by 119bp qoq to 30.7%. PAT came in at Rs330cr, up 77.4% qoq, primarily aided by tax write-back of Rs119cr in 4QFY2012 vs. tax expense of Rs14cr in 3QFY2012 and gain on minority interest front of Rs129cr in 4QFY2012 vs. expense of Rs55cr in 3QFY2012.”
“The company is trying to slash free minutes in the network to aid the overall ARPU profile of the company. Going forward, we expect RCom’s mobile segment to record a 7.5% CAGR in subscribers over FY201114E and ARPM to stabilize at Rs0.44/min in FY2013 and FY2014. Currently, the company is striving to reduce the debt level in its books and has again kept its stance of selling stake in its tower assets, which might help the company to deleverage its balance sheet and reduce debt and can be a positive trigger to the stock price. However, various other announcements of selling tower assets were made earlier as well, but none of them materialized. Also, RCom is eying to list its cable business in Singapore. We maintain our Neutral view on the stock,” says Angel Broking research report.
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