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Buy Idea Cellular, target of Rs 112: IIFL
IIFL has recommended a buy rating on Idea Cellular with a 12 month target of Rs 112. In FY08, Idea managed its FX exposure better than peers. Idea also sported the best asset turnover, highest depreciation rates and the highest ROE among the big carriers.
IIFL has recommended a buy rating on Idea Cellular with a 12 month target of Rs 112 in its September 18, 2008 research report. "Idea Cellular is yet to receive the USD 640 million investment from the private-equity deal done in May this year, and the rupee's depreciation against the USD will result in a gain exceeding Rs 2 billion for Idea. In FY08, Idea managed its FX exposure better than peers. Idea also sported the best asset turnover, highest depreciation rates and the highest ROE among the big carriers. It raised its market share in FY08 from 8.4% to 9.2% in terms of share of wireless subscribers."
"While minutes of usage increased by 5%, the rate per minute fell by 15%, resulting in a 12% drop in ARPU to Rs 299. At 54%, Idea's YoY revenue growth rate was equal to that of Bharti. We build in higher cost of imports over the next 2 years and raise WACC to 14% and reduce our DCF target price from Rs 141 to Rs 112. BUY," says IIFL's research report.
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To read the full report click on the attachment.....
