Buy GTL; target of Rs 401: Emkay Research

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Buy GTL; target of Rs 401: Emkay Research

Emkay Research is bullish on GTL and has recommended buy rating on the stock. The increasing capex spends by the telecom operators and the entry of new players in the industry provides higher growth opportunity for GTL. The order book of the company further increased to Rs 19 billion, executable over the next 12 months.

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Emkay Research is bullish on GTL and has recommended buy rating on the stock in its January 28, 2008 report. "GTL Ltd reported Q3FY08 results above our expectations. The net sales for the quarter increased by 53% yoy to Rs 4503 million. The EBIDTA for the quarter increased by 110% yoy to Rs 667 million. The EBIDTA margins expanded by 400bps yoy to 14.8% however on a qoq basis the margins declined by 30bps. The APAT for the quarter increased by 62% yoy to Rs 350 million. The higher interest costs of Rs 161 million during the quarter led to a lower growth in the APAT. During the quarter GTL completed the buy back of 8.6 million shares at Rs 300 per share. During the quarter the company acquired ADA Cellworks Malaysia and SCS USA, which together would contribute an additional USD40mn to the top line of the company from the coming year. The increasing capex spends by the telecom operators and the entry of new players in the industry provides higher growth opportunity for GTL. The order book of the company further increased to Rs 19 billion, executable over the next 12 months. Considering the better than expected results, increasing opportunity and the additional revenues from the acquisitions, we are upgrading our earning estimates for the company by 23% and 15% for FY08E and FY09E respectively. We upgrade our rating from ACCUMULATE to BUY with a price target of Rs 401 based on SOTP approach, "according to Emkay Research report.

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