Buy Reliance Comm, target of Rs 451: Angel

Angel Broking has maintained its buy rating on Reliance Communications with a target of Rs 451 in its October 31, 2008 research report. "Reliance Communications (RCOM) recorded a disappointing 21.6% yoy growth in Top-line in 2QFY2009. Sequentially, Top-line growth came in at 5.9%. Owing to higher Net Interest Income (up 109% yoy) and Tax credits, RCOM’s Bottom-line grew by 17.3% yoy in spite of the Margin contraction. On a qoq basis, Bottom-line grew by just 1.2%. RCOM this quarter in August launched its Direct to Home (DTH) services under the BIG TV banner with an aim to tap the Home Entertainment space, which has a market size of 120 million Indian households."

"Going forward, we expect RCOM to record a 24.3% CAGR in Top-line over FY2008-10E, while Bottom-line is expected to grow at a CAGR of 15.8% in the mentioned period. At the CMP, the stock is trading at a P/E of 6.6x FY2010E EPS, EV/EBITDA of 5.9x FY2010E EBITDA and at an EV/subscriber of USD 130 on our FY2010 subscriber estimates. We maintain a Buy on the stock, with a revised Target Price of Rs 451 (Rs 595), including Rs 335 as the value of the core business (10x P/E multiple) and Rs 116 as the towerco value," says Angel Broking's research report.

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Source: Moneycontrol