Moneycontrol Bureau
Goldman Sachs feels top 10 percent of Indian mobile subscribers will likely view Reliance Jio's offers as attractive and these top 10 percent subscribers have an average ARPU (average revenue per user) of Rs 600 and account for 40 percent of industry revenues.
Customer concerns around call failure and likely further cuts from rival telecom companies are key hurdles for Jio, it feels while estimating 50 percent customer retention in FY18.
Goldman expects 50 million customers for Jio in FY18 with pre-tax ARPU of Rs 250 driving wireless revenues of USD 2 billion in FY18.
Credit Suisse says Jio to start charging is the best of positives for the sector from announcements. It believes nearly 50 percent of revenue for incumbent come from subscribers with more than Rs 300 ARPU.
The Rs 303 plan puts an ARPU ceiling on all such subscribers, it feels. According to the research firm, Rs 149 plan by Jio is likely to get sweeter by April.
Credit Suisse sees no let down in Jio's competitive aggression.
CLSA says Jio's ‘more-for-more strategy’ targeted at high ARPU and retention.
Jio estimates assume 50 percent conversion of active 4G subscribers, aggregating to around 8 percent sector revenues, it feels.
If Jio conversions are higher, these will add incremental risks to incumbent forecasts, according to the research firm.
CLSA says compulsion on high upfront payment will impact subscriber retention. Sector consolidation is a long-term positive, it believes.
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.
Morgan Stanley feels any interest in Axis Bank will be based on its retail franchise as it is one of the few banks with a strong retail deposit franchise.
Axis has been under pressure for the last 18 months on asset quality front and investors are worried after the last two-quarter surge in bad loans.
Bank of America Merrill Lynch has maintained buy rating on the stock, with a target price of Rs 3,800 as it feels earnings trajectory may improve over 2-3 years and new launches in US market will aid earnings growth.
However, resolution of pending warning letters is critical for US growth, it feels.
CLSA India Strategy
CLSA says it will avoid Exide Industries, TVS Motor, Voltas, Emami, Ambuja Cements, HPCL and SpiceJet.
The brokerage house feels sluggish pace of margin expansion will likely extend into FY18 and sectors facing margin compression in FY18 are petrochemical, property and aviation.
Amongs stocks under its coverage, CLSA sees margin expansion for 47 stocks in FY18 and its strategy top picks are Pidilite Industries, Maruti Suzuki, Sun Pharma, Lupin and IOC.
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