Jun 11, 2013, 10.34 AM | Source: Moneycontrol.com
Brokerage house Motilal Oswal has maintained a neutral rating on Reliance Communications (RCOM) with a target price of Rs 111 in its June 10, 2013 research report.
Motilal Oswal (more)
Increasing target price by 14 percent; maintain Neutral
Intra-city fiber, the missing piece post inter-city fiber and tower deals
This is the second major agreement between these two companies. In April 2013, the two companies had announced an INR12b inter-city optic fiber IRU (Indefeasible Rights to Use) agreement. Going forward there is further scope to for a similar agreement for leasing its intra-city fiber network to Reliance JIO.
Incremental steady-state annual revenue of ~INR8b and EBITDA of INR7b-7.5b
Assuming a monthly rental of INR15,000 per slot and steady-state utilization of 45,000 slots by Reliance JIO, we estimate steady-state incremental revenue of INR8.1b per year and steady-state incremental EBITDA of INR7.3b per year assuming 90 percent incremental EBITDA margin.
High debt remains a concern though deal to aid deleveraging
"RCOM's net debt of INR389b and net debt/EBITDA of ~6x remains a concern, though recent infrastructure sharing deals would aid deleveraging. Our estimates imply decline in net debt/EBITDA from 5.9x currently to 3.3x by FY15.
Upgrading FY14/15E EBITDA by 1-2 percent and target price by 14 percent; Neutral
"We are upgrading FY14/15E EBITDA by 1-2 percent and target price by 14 percent (INR14) to INR111. The stock trades at an EV of 7.5x FY14E and 6x FY15E EBITDA. Maintain Neutral," says Motilal Oswal research eport.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
To read the full report click here
Ashwani Gujral of ashwanigujral.com is of the view
RCom has plans to upgrade all its CDMA customers t
IBM said through this alliance, Rcom will be able
Moody's said the negative outlook reflects its vie
"RCoM has informed DoT that it will be upgrading i
Amit Harchekar, Chief Technical Strategist at A PL
Revenues are expected to increase by 6.8 percent Q
Tata Steel, Hindalco, Axis Bank, Coal India and ON