Buy Idea Cellular; target of Rs 215: ICICIdirect

ICICIdirect.com's report on Idea Cellular

Idea displayed robustness in subscriber additions, owing to promotional minutes, which led to a voice ARPM decline by 5.1% QoQ to 33.8 paisa. Voice volumes grew 8.4% QoQ to 185 billion minutes. The data segment exhibited growth of 12.4% QoQ to Rs 1402.5 crore, forming 16.9% of mobility revenues aided by 18.3% QoQ increase in the data volumes to 54 billion MB in the quarter. Data ARMB declined 5.0% QoQ to 24.5 paisa

EBITDA came in at Rs 3064.5 crore, better than expectations, up 11.3% QoQ aided by lower-than-expected network operating & marketing expenses, leading to EBITDA margin expansion to 36.4%

PAT came in at Rs 941.8 crore (vs. expectation of Rs 843.9 crore), up 22.8% QoQ aided by higher-than-expected EBITDA & other income

"Idea continues to post robust voice & data volume growth. We expect revenue & EBITDA to post 11.2% & 15.9% CAGR (FY15-17E), respectively. It will benefit from lower energy costs. Hence, margins may expand to 37.2% in FY17E. Accounting for interest & depreciation related to recent spectrum purchases has reduced our PAT estimates. It will have a minimum cash flow impact. We maintain BUY with a target price of Rs 215", says ICICIdirect.com research report.

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