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Last Updated : Jan 22, 2016 01:42 PM IST | Source: CNBC-TV18

'Expected Idea margins to be lower on higher SG&A cost, capex'

Idea is especially in the limelight after it announced its third quarter numbers on Thursday.

Bhavesh Gandhi, Telecom Analyst, IIFL, talks about telecom stocks such as Idea Cellular and Bharti Airtel. Idea is especially in the limelight after it announced its third quarter numbers on Thursday.

Below is the verbatim transcript of Bhavesh Gandhi's interview with Latha Venkatesh and Ekta Batra on CNBC-TV18.

Latha: How have you responded to the numbers, does it worry you that the margins are under a cloud and that even the data revenues are not picking up? What is your price target?

A: As far as margins are concerned, broadly we had expected some sort of weakness coming in on a sequential basis especially with higher SG&A cost even that they had already indicated increasing capex. More sustainable or more longer-term point of concern or worry at this point would be the relatively slowdown or sort of slower nature of data volume growth on a sequential basis. Considering that Q3 and Q4 are traditionally good for the company as a whole. So yes, margins -- we may not see too much into it from a quarterly perspective but data revenues we would certainly keep an eye on.

Ekta: The second top loser on the Nifty right now is Bharti Airtel. What is your expectation from Bharti after seeing Idea's numbers?

A: For Bharti, from a perspective India's business we expect margins to remain stable or in a worst case decline on a sequential basis. From Africa perspective we do expect some sort of stability in the 20-21 percent kind of EBITDA margin for Africa combined with about 1.5 percent US dollar revenue growth on a sequential basis.

Latha: Once again your price targets for both these and action for Bharti and Idea?

A: For both the stocks, we would maintain our buy and Bharti we have target of Rs 430 and Idea we will re-evaluate our estimates but as of now, our recommendation remain buy with a target of Rs 175.

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First Published on Jan 22, 2016 12:07 pm
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