Stay invested in Rel Comm: Angel Broking

Phani Sekhar, Angel Broking is of the view that long term investor with high risk appetite can stay invested in Reliance Communications.

Sekhar told CNBC-TV18, “Reliance Communication is a high risk-high return proposition, so even if one is an investor this cutting of CDMA reserve price is certainly a welcome, but I do not think it will determine the long-term growth trajectory of Reliance over a period of time.
 
He further added, “So if one has a high risk appetite then one can stay invested, because this stock is extremely prone to news flow, but over a period of time I guess Reliance Communications stock will be directed more by what happens to the regulatory uncertainties and more importantly it has a very leveraged balance sheet, net debt-to-EBITDA of almost five times which with its current cash flow profile is very difficult to retire over a period of time. So that is what is keeping the stock capped and the stock keeps getting excited whenever there is news.”
 
“So the investor has to take cognizance of that. If these developments go in favour of the company then I guess there is a huge return that is possible, but generally these returns can only be realized over a period of three to four years. So keeping that in mind I guess the investor can exit if one has the time horizon of anything less than that,” he added.