Hold Idea Cellular; target of Rs 95: Edelweiss

Edelweiss' research report onIdea Cellular

Idea Cellular (Idea) reported 6.2% QoQ revenue decline (Street estimate 5.0% QoQ decline) to INR 81.3bn as voice and data realisations plunged impacted by heightened competition. However, EBITDA margin spurted by 200bps to 27.0% on cost rationalistion and forex gains. Idea guided for INR 60bn capex in FY18, versus actual capex of INR 78bn in FY17.

Outlook

Management highlighted they are looking at active infrastructure sharing arrangement with 2-3 operators, which can significantly lower network costs and capex. As competitive intensity will keep industry revenue growth under pressure, we expect companies to adopt significant cost cutting measures. Maintain ‘HOLD’ with DCF -based target price of INR 95.

For all recommendations, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More