Hold Idea Cellular; target of Rs 91: Edelweiss

Edelweiss' research report on Idea Cellular

Idea Cellular (Idea) reported 0.5% QoQ revenue growth (Street’s estimate 1.0% decline) to INR81.7bn as voice and data realisations plunged, though offset by volume surge. However, EBITDA margin eroded by 310bps QoQ to 23.0% on higher network and IUC cost. Idea continued to lose data subscribers with 4.1mn drop in Q1FY18.

Outlook

At CMP, the stock is trading at 10.2x FY18E and 8.7x FY19E EV/EBITDA. We maintain ‘HOLD/SP’ with a revised DCF‐based target price of INR91 (from INR95) as our EBITDA estimates are lowered and risk‐free rate is revised to 7%, from 8%.

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