Idea Cellular (Q1 FY14)

India Infoline News Service | Mumbai |

Idea lowered the useful life of its fixed assets which caused ~25% qoq jump in depreciation with full year impact seen at Rs4.5bn; reported PAT of Rs4.6bn beat our estimate of Rs4bn on revenue, EBIDTA outperformance and included Rs230mn FX loss

CMP Rs167, Target Rs200, Upside 19.8%
  • Idea Q1 results drove a massive beat on our revenue and PAT estimates led by strong pricing growth and margin expansion


  • Q1 revenues were up 7.9% qoq driven by suprisingly robust 6.1% qoq increase in rev/min (est +0.3% qoq) to 43.7p as company benefited from sustained focus on removal of promotional free/discounted minutes as well as from higher VAS contribution (+80bps qoq); data improved its share to 7.2% of service revenues as data volumes grew ~21% qoq; volume growth of 2.9% qoq was perhaps the only component below our estimate of 5%


  • An absolute decline in SG&A costs by 11% qoq and ~100bps reduction in interconnect charges more than covered a one off Rs250mn regulatory license charge and resulted in a 415bps jump in EBIDTA margin, again much ahead of our expectations


  • Idea lowered the useful life of its fixed assets which caused ~25% qoq jump in depreciation with full year impact seen at Rs4.5bn; reported PAT of Rs4.6bn beat our estimate of Rs4bn on revenue, EBIDTA outperformance and included Rs230mn FX loss


  • Net debt declined to Rs102bn from ~Rs116bn in Q4 FY13 while capex for the quarter was at Rs3.3bn and co reiterated FY14 capex guidance of Rs35bn


  • Board of Directors approved fund raising to the tune of Rs30bn via QIP and garner up to Rs7.5bn via pref allotment to Axiata Group 


  • A stellar performance in Q1 with a significant beat on both topline and bottom line as robust RPM improvement accompanied by margin tailwinds; we raise our revenues, EPS estimates for FY14/15 and upgrade the stock to BUY with revised 9-12 mth target of Rs200 (earlier Rs138).

Results table
(Rs m)
Q1 FY14
Q4 FY13
% qoq
Q1 FY13
% yoy
Net sales
65,388
60,614
7.9
55,037
18.8
Access and I/C charges
(10,951)
(10,770)
1.7
(9,687)
13.1
Network opex
(15,436)
(14,298)
8.0
(13,406)
15.1
License fees
(7,465)
(7,191)
3.8
(6,017)
24.1
Personnel costs
(3,073)
(2,976)
3.3
(2,740)
12.2
S G & A  expenses
(7,699)
(8,649)
(11.0)
(8,832)
(12.8)
Operating profit
20,763
16,731
24.1
14,355
44.6
OPM (%)
31.8
27.6
415 bps
26.1
567 bps
Depreciation
(11,353)
(9,092)
24.9
(8,325)
36.4
Interest
(2,211)
(2,244)
(1.5)
(2,670)
(17.2)
PBT
7,200
5,395
33.5
3,361
114.2
Tax
(2,573)
(2,313)
11.2
(1,019)
152.4
Effective tax rate (%)
35.7
42.9
(714) bps
30.3
540 bps
PAT
4,627
3,082
50.1
2,341
97.6
PAT margin (%)
7.1
5.1
199 bps
4.3
282 bps
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs m)
BSE 95.75 [0.40] ([0.42]%)
NSE 95.75 [0.45] ([0.47]%)

***Note: This is a NSE Chart

 

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