Reliance Communications (Q4 FY13)

India Infoline News Service | Mumbai |

Gross wireless revenue growth at 2.5% qoq was better than expected on the back of 2.3% increase in total MOUs combined with 0.2% qoq increase in RPM while wireless churn too declined as was the case with Bharti and Idea; Global business sales were below par at +0.5% qoq

CMP Rs106, Target price Rs80, Downside 24.5%

Rcom Q4 revenues and EBIDTA were both below our estimates with revenues remaining flat qoq (est +1.8% qoq); PAT boosted by one offs (~Rs5.5bn) in other income without which Rcom would have posted pre tax loss

Gross wireless revenue growth at 2.5% qoq was better than expected on the back of 2.3% increase in total MOUs combined with 0.2% qoq increase in RPM while wireless churn too declined as was the case with Bharti and Idea; Global business sales were below par at +0.5% qoq

Net debt stood at ~Rs374bn or 6.3x FY13 EBIDTA and remains a persistent concern; company expects one time IRU fees of Rs12bn from Reliance Jio to accrue over FY14 with a majority of it flowing through PBT 

We note several positives like 1) headline tariff increase 2) infrastructure sharing deal with Reliance Jio and 3) possibility of faster GSM growth but the recent run up in stock price leaves little valuation headroom; retain SELL with revised 9-12 mth target of Rs80 (earlier Rs60). 

Results table
(Rs m) Q4 FY13 Q3 FY13 % qoq Q4 FY12 % yoy
Net sales 51,300 51,360 (0.1) 50,100 2.4
Access & license fees (10,079) (9,760) 3.3 (8,396) 20.0
Network opex (16,340) (15,997) 2.1 (18,390) (11.1)
Staff (2,125) (3,184) (33.3) (3,082) (31.1)
SG&A (8,831) (7,539) 17.1 (6,910) 27.8
Operating profit 13,925 14,880 (6.4) 13,322 4.5
OPM (%) 27.1 29.0 (183) bps 26.6 55 bps
Depreciation (10,892) (9,337) 16.7 (9,703) 12.3
Interest (7,475) (6,054) 23.5 (5,795) 29.0
Other income 8,260 1,650 400.6 3,000 175.3
PBT 3,818 1,139 235.2 824 363.3
Tax (751) - - 1,193 -
Minority/Associates (39) (87) (55.2) 1,287 -
Adjusted PAT 3,028 1,052 187.8 3,304 (8.4)
Adj. PAT margin (%) 5.9 2.0 385 bps 6.6 (69) bps
Extra ordinary items - - - 12 -
Reported PAT 3,028 1,052 187.8 3,316 (8.7)
Source: Company, India Infoline Research

Financial summary
Y/e 31 March (Rs m) FY12 FY13E FY14E FY15E
Revenues 196,770 205,610 211,508 222,393
yoy growth (%) (12.3) 4.5 2.9 5.1
Operating profit 57,850 59,425 64,087 68,720
OPM (%) 29.4 28.9 30.3 30.9
Reported PAT 9,280 6,716 4,629 6,911
yoy growth (%) (31.0) (27.6) (31.1) 49.3





EPS (Rs) 4.5 3.3 2.2 3.3
P/E (x) 23.6 32.6 47.3 31.7
P/BV (x) 0.6 0.6 0.6 0.6
EV/EBITDA (x) 10.3 10.1 8.7 7.8
Debt/Equity (x) 1.0 1.1 1.0 0.9
ROE (%) 2.3 1.9 1.4 2.0
ROCE (%) 3.1 4.4 3.9 4.2
Source: Company, India Infoline Research
BSE 11.86 [0.06] ([0.50]%)
NSE 11.85 [0.05] ([0.42]%)

***Note: This is a NSE Chart

 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.