Stay away from telecom space: Sanjeev Prasad

Excerpts from Bazaar on CNBC-TV18 Watch the full show » Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

Stay away from telecom space, says Sanjeev Prasad , Head-Research, Kotak Securities.

Prasad told CNBC-TV18, "We have always been somewhat cautious on telecom sector. So our fair value now for Bharti Airtel is about Rs 320, for Reliance Communications is Rs 150 but I don't see there is any big hurry to rush into these stocks even if the current prices are somewhat close to where the target prices are because I think the environment look pretty bad for the next six-seven quarters. I don't think things are going to improve in a big hurry; consolidation is way out for people to start playing immediately. We haven't even seen some of the operators starting operations, something like Etisalat or Telenor or for that matter even Tata Docomo in several circles they are yet to start operations."

He further added, "The pricing environment will remain very bad and it will even worsen from where we are. Keeping in mind the fact that most of price restructuring which is happening is in the prepaid segment. Going forward at some point of time, you will see mobile number portability coming in and you should see the same madness will include the postpaid segment also. You could probably see handsome subsidies are coming to the markets. So that is going to be a big booster as far as the telecom sector is concerned. So stay out of it, no point in even looking at it for the next three-four quarters."