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Last Updated : Sep 19, 2016 11:04 AM IST | Source: Moneycontrol.com

Buy Reliance Communications; target of Rs 85: Axis Direct

Axis Direct is bullish on Reliance Communications has recommended buy rating on the stock with a target price of Rs 85 in its research report dated September 16, 2016.

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Todays L/H

Axis Direct's research report on Reliance Communications

RCOM has announced the merger of its wireless business with that of Aircel. RCOM and Aircel’s parent Maxis will hold 50% each in the merged company (MergedCo) which has 12% combined revenue market share. RCOM will transfer Rs 200 bn debt to the MergedCo which will have debt/equity of 1x. Management is expected to share the financials and operating metrics of the MergedCo closer to consummation of the deal. Thedevelopment will drive market share gains and scale efficiencies in the future.

Deleveraging: Deal for tower stake sale is expected to be completed in Q3FY17. Post transfer of Rs 200 bn debt to MergedCo and tower stake sale, management expects net debt at Rs 90 bn (Q1FY17: Rs 443 bn)

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First Published on Sep 19, 2016 11:04 am