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Reliance Communications (Q2 FY14)

 Company reorganized its financial reporting structure in to two geographical units namely India and Global operations; India operations further divided in to voice (wireless + fixed line), non voice and others (DTH and data centres)

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs132, Target Rs115, Downside 13.0%
  • Rcom Q2 revenue growth of 0.9% qoq was lower than our expectation as we had built in partial revenue inflow from fibre optic deal with Reliance Jio

  • Company reorganized its financial reporting structure in to two geographical units namely India and Global operations; India operations further divided in to voice (wireless + fixed line), non voice and others (DTH and data centres)

  • Revenue per min under the new reporting structure came in at 43.4p, up 3.1% qoq, and is not comparable to our estimates while total MOUs declined 4.5% qoq to 101.5bn mins on a like-to-like basis; data traffic volumes grew ~21% qoq

  • EBIDTA margin at 34.6% beat our estimate on lower network opex and SG&A while PAT of Rs6.7bn was boosted by write back of Rs4.4bn for business restructuring during the quarter

  • We do not foresee any significant improvement in core operating metrics while current price adequately factors in any positives from potential asset monetization and deleveraging; we rework our FY14/15 earnings estimates but retain Sell with revised 9-12mth target of Rs115 (earlier Rs110).

Results table
(Rs m)
Q2 FY14
Q1 FY14
% qoq
Q2 FY13
% yoy
Net sales
53,610
53,150
0.9
50,310
6.6
Access & license fees
(9,510)
(9,620)
(1.1)
(9,500)
0.1
Network opex
(16,288)
(17,610)
(7.5)
(15,584)
4.5
Staff
(2,240)
(2,420)
(7.4)
(3,440)
(34.9)
SG&A
(7,032)
(7,455)
(5.7)
(7,116)
(1.2)
Operating profit
18,540
16,045
15.6
14,670
26.4
OPM (%)
34.6
30.2
439 bps
29.2
542 bps
Depreciation
(9,370)
(8,830)
6.1
(9,130)
2.6
Interest
(6,760)
(6,870)
(1.6)
(5,930)
14.0
Other income
4,740
970
388.7
1,710
177.2
PBT
7,150
1,315
443.7
1,320
441.7
Tax
(10)
(10)
-
-
-
Minority/Associates
(390)
(220)
77.3
(300)
30.0
Reported PAT
6,750
1,085
522.1
1,020
561.8
Source: Company, India Infoline Research

Financial summary
Y/e 31 March (Rs m)
FY12
FY13
FY14E
FY15E
Revenues
196,770
205,610
218,872
241,091
yoy growth (%)
(12.3)

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