Reliance Communications (Q1 FY14)

India Infoline News Service | Mumbai |

Global business revs dropped 6.7% qoq while EBIDTA margin also declined to 22.5% during the quarter; overall EBIDTA margin improved 306bps qoq due to lower SG&A and interconnect charges

CMP Rs124, Target Rs110, Downside 11.0%
  • Rcom Q1 revenue growth of 3.6% qoq was below our expectation and driven by 4.1% qoq rise in wireless revenues


  • Volume growth at 0.2% remained flat qoq vs our estimate of +2% while pricing (+4.5% qoq) benefited from tariff hikes and strong focus on paid and profitable minutes; consequently, wireless EBIDTA was up a strong 6.6% qoq with wireless margin at 27.3%


  • Data subscribers base improved to ~31mn users while 3G customers at 7.7mn account for 25% of data users; data usage/customer at 342MB is the highest in the industry 


  • Global business revs dropped 6.7% qoq while EBIDTA margin also declined to 22.5% during the quarter; overall EBIDTA margin improved 306bps qoq due to lower SG&A and interconnect charges


  • Interest cost was lower qoq due to one time charge of Rs700mn included in Q4 interest cost; depreciation was lower in part due to higher proportion of towers being connected to grid; reported PAT above our estimate on improved EBIDTA performance as well as lower interest and depreciation costs and qoq decline in PAT included the impact of lower other income 


  • Rcom posted improved performance in Q1 and several recently announced measures are step in the right direction; however, we would wait for further improvement in core operating metrics before turning more constructive on the company. We revise our EPS estimates post Q1 numbers but retain SELL with 9-12 mth target of Rs110.

Results table
(Rs m)
Q1 FY14
Q4 FY13
% qoq
Q1 FY13
% yoy
Net sales
53,150
51,300
3.6
52,640
1.0
Access & license fees
(9,620)
(10,080)
(4.6)
(8,570)
12.3
Network opex
(17,610)
(16,340)
7.8
(17,852)
(1.4)
Staff
(2,420)
(2,130)
13.6
(3,140)
(22.9)
SG&A
(7,455)
(8,831)
(15.6)
(7,129)
4.6
Operating profit
16,045
13,919
15.3
15,949
0.6
OPM (%)
30.2
27.1
306 bps
30.3
(11) bps
Depreciation
(8,830)
(10,890)
(18.9)
(9,090)
(2.9)
Interest
(6,870)
(7,470)
(8.0)
(5,540)
24.0
Other income
970
8,260
(88.3)
550
76.4
PBT
1,315
3,819
(65.6)
1,869
(29.6)
Tax
(10)
(750)
-
40
-
Minority/Associates
(220)
(40)
450.0
(290)
(24.1)
PAT
1,085
3,029
(64.2)
1,619
(33.0)
PAT margin (%)
2.0
5.9
(386) bps
3.1
(103) bps
Source: Company, India Infoline Research

Financial summary
Y/e 31 March (Rs m)
FY12
BSE 11.86 [0.06] ([0.50]%)
NSE 11.85 [0.05] ([0.42]%)

***Note: This is a NSE Chart

 

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