Reliance Communications (Q3 FY13)
India Infoline News Service | Mumbai |
As expected, EBIDTA margin remained flat as increased SG&A expenses balanced by lower staff costs while lower minority share payout led to 3% qoq rise in reported PAT though much below our estimate of Rs1.2bn
CMP Rs82, Target Rs60, Downside 26.8%
Source: Company, India Infoline Research
Financial summary
Source: Company, India Infoline Research
- Rcom Q3 revenue growth of 2.1% qoq came in line with our estimate of Rs51.4bn driven by 2.1%/0.9% qoq rise in wireless/GEBU business revenues
- Mobile revenue posted 2.1% qoq increase, marginally below our forecast for a 2.6% rise even as RPM rose a better than expected ~2% qoq; traffic (total MOUs) however, remained tepid despite H2 being seasonally strong for operators
- As expected, EBIDTA margin remained flat as increased SG&A expenses balanced by lower staff costs while lower minority share payout led to 3% qoq rise in reported PAT though much below our estimate of Rs1.2bn
- Debt reduction remains the key focus area and reported news flow on this front would probably drive near term stock performance; moreover, base tariff hike to 1.5p/sec across all circles would also support RPM improvement though its impact on volume growth in the coming quarters remains to be seen. We tweak our FY13/14 estimates, introduce FY15 forecasts and downgrade the stock to SELL with 9-mth target of Rs60 (earlier Rs54).
(Rs m) | Q3 FY13 | Q2 FY13 | % qoq | Q3 FY12 | % yoy |
Net sales | 51,360 | 50,310 | 2.1 | 48,240 | 6.5 |
Access & license fees | (9,760) | (9,512) | 2.6 | (9,050) | 7.8 |
Network opex | (15,997) | (15,582) | 2.7 | (14,957) | 7.0 |
Staff | (3,184) | (3,443) | (7.5) | (2,940) | 8.3 |
SG&A | (7,539) | (7,101) | 6.2 | (7,458) | 1.1 |
Operating profit | 14,880 | 14,672 | 1.4 | 13,835 | 7.6 |
OPM (%) | 29.0 | 29.2 | (19) bps | 28.7 | 29 bps |
Depreciation | (9,337) | (9,130) | 2.3 | (9,780) | (4.5) |
Interest | (6,054) | (5,929) | 2.1 | (3,780) | 60.2 |
Other income | 1,650 | 1,710 | (3.5) | 2,280 | (27.6) |
PBT | 1,139 | 1,323 | (13.9) | 2,555 | (55.4) |
Tax | - | - | - | (140) | - |
Minority/Associates | (87) | (302) | (71.2) | (550) | (84.2) |
PAT | 1,052 | 1,021 | 3.0 | 1,865 | (43.6) |
PAT margin (%) | 2.0 | 2.0 | 2 bps | 3.9 | (182) bps |
Financial summary
Y/e 31 March (Rs m) | FY12 | FY13E | FY14E | FY15E |
Revenues | 196,770 | 204,836 | 212,955 | 223,855 |
yoy growth (%) | (12.3) | 4.1 | 4.0 | 5.1 |
Operating profit | 57,850 | 61,861 | 66,016 | 70,738 |
OPM (%) | 29.4 | 30.2 | 31.0 | 31.6 |
Reported PAT | 9,280 | 4,875 | 6,186 | 7,596 |
yoy growth (%) | (31.0) | (47.5) | 26.9 | 22.8 |
EPS (Rs) | 4.5 | 2.4 | 3.0 | 3.7 |
P/E (x) | 17.8 | 33.9 | 26.7 | 21.7 |
P/BV (x) | 0.4 | 0.4 | 0.4 | 0.4 |
EV/EBITDA (x) | 9.4 | 8.8 | 8.0 | 7.1 |
Debt/Equity (x) | 1.0 | 1.0 | 1.0 | 0.9 |
ROE (%) | 2.3 | 1.3 | 1.7 | 2.0 |
ROCE (%) | 3.1 | 3.7 | 3.6 | 3.7 |
***Note: This is a
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