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Last Updated : Feb 01, 2016 04:34 PM IST | Source: Moneycontrol.com

Sell Reliance Communications; target of Rs 40:Motilal Oswal

Motilal Oswal is bearish on Reliance Communication and has recommended sell rating on the stock with a target price of Rs 40 in its research report dated January 27, 2016.

 
 
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Motilal Oswal's research report on Reliance Communications

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). IndiaEBITDA grew ~1% QoQ to INR16.2b (4% below estimate). Global segment EBITDA grew ~4% QoQ to INR1.83b (our estimate: INR1.82b).

Valuation and view: The stock trades at EV/EBITDA of 8x FY16E and 7.5xFY17E. 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 (exReliance JIO contract) and INR40b for upside from signed contracts with Reliance JIO (~5x steady-state EBITDA).


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First Published on Feb 1, 2016 04:34 pm
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