Motilal Oswal is bearish on Reliance Comm and has recommended buy rating on the stock with a target price of Rs 40 in its research report dated January 27, 2016.
Motilal Oswal's research report on Reliance Comm
3Q revenue/EBITDA below estimates: RCOM’s 3QFY16 revenue declined 1.1% QoQ to INR53b (3% below estimate), led by lower India as well as global revenues. EBITDA grew ~1% QoQ to INR18b (our estimate: INR18.7b). India EBITDA grew ~1% QoQ to INR16.2b (4% below estimate). Global segment EBITDA grew ~4% QoQ to INR1.83b (our estimate: INR1.82b).
The stock trades at EV/EBITDA of 8x FY16E and 7.5x FY17E. We are cutting our EBITDA estimates by 1-5%. Maintain Sell with a target price of INR40 based on FY18 EV/EBITDA of 6x for core business (ex Reliance JIO contract) and INR40b for upside from signed contracts with Reliance JIO (~5x steady-state EBITDA).
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