Idea slumps 9%; analysts cut target post dismal Q2

Kotak has cut target price to Rs 180 per share stating that lack of positive triggers mean a weak near-term prognosis for the stock. However, it likes Idea as a medium-term play on industry consolidation and solid execution. It has also slashed EBITDA estimate by 4-7 percent in FY16-18. Inability to move voice pricing up and indications of high price elasticity on the data front are key negatives, Kotak notices in Idea's Q2 result.

JP Morgan reiterates neutral rating on Idea with a reduced target of Rs 170. Its says that Septemer qaurter interrupted its streak of recent quarters of outperformance. It sees higher-than-expected pricing declines in both voice and data as management acknowledged that attempts to raise data pricing have been met with resistance. Going forward revenue growth will be 'volume led' with continued pricing decline likely, it adds.

Motilal Oswal is also neutral on the stock with a cut target price of Rs 165 per share as it feels ongoing significant increase in the proportion of data revenue could disrupt pricing as well as investment requirement. Idea’s net debt increased to Rs 229 billion, led by outlay towards spectrum won earlier during the year. Motilal expects Net debt/EBITDA to rise in FY16.

Religare maintains hold rating with a lower target price of Rs 150 per share.

At 14:21 hrs Idea Cellular was quoting at Rs 139.30, down Rs 12.30, or 8.11 percent on the Sensex.

Posted by Nasrin SultanaFollow @NasrinzStory