Monday 3 November 2008

Buy Reliance Comm, target of Rs 350: Motilal Oswal

Motilal Oswal has maintained its buy rating on Reliance Communications with a target of Rs 350 in its November 1, 2008 research report. Revenue increased 23.3% YoY and 6.1% QoQ to Rs 56.5 billion. We downgrade our revenue estimates by 1-1.5% and EBITDA estimates by 4-6% for FY09 and FY10. We are downgrading our FY10 PAT estimate by 6% but maintain our FY09 PAT estimate on higher net finance income and lower tax rate. The stock trades at an EV/EBITDA of 6.7x FY09E and P/E of 7.8x FY09E."

"We cut our target price to Rs 350 (Rs 520 earlier), which now reflects 30% discount to DCF for core business and 50% discount to DCF for tower company (implied target EV/EBITDA of 6.7x FY10E). Maintain Buy on upside to KPIs and market share post GSM scale-up. Key risks stem from margin pressure due to aggressive expansion, and upward risk to finance costs," says Motilal Oswal's research report.

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Source: Moneycontrol

Posted by Harsh at 07:08

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