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Analyst Research Report Snapshot


Reliance Communications Ltd. | Q3FY13 Result Update




IndiaNivesh Securities Pvt Ltd


23 Jan 2013





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Reliance Communications Ltd. | Q3FY13 Result Update | Below expectations performance - disappointment on net profit front continues... Reliance Communication Ltd (RCOM) Q3FY13 performance was below street expectations on all fronts. Net revenue grew 1.9% qoq to Rs.53.0bn (Bloom est: Rs.52.5bn). The revenue growth was led by (I) Wireless [+2.1 qoq | ~63% of gross revenue], (II) Global enterprise business unit [+0.9% qoq | ~34% og gross revenue] and (III) others [+1.8% qoq | ~3% of gross revenue]. Valuations: At CMP of Rs88, the stock is trading at 7.9x FY13E and 7.3x FY14E EV/EBITDA Bloomberg estimates. The significant decline in subscriber base resulted in improvement in major KPIs. Uptake in 3G/Data usage looks positive in long-run. We like rational decision making [baseline tariff hike & curtailment of freebies] across the industry, led to appreciation in Rcom’s stock price. However, lack of clarity on divestment of tower business and Flag Telecom listing limits the upside potential. Additionally, highly leveraged balance sheet along with heavy interest out-go (11% of total rev) increase business risk. We do not have a formal rating on the stock.

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