Thursday, 13 November 2008

Motilal Oswal neutral on Idea Cellular

Motilal Oswal has downgraded its rating on Idea Cellular to neutral in its November 6, 2008 research report. "Idea’s 2QFY09 PAT declined 45% QoQ and 35% YoY to Rs 1.44 billion. While revenues grew 5.8% QoQ (in-line). We have downgraded our EBITDA estimates by 7% for FY09 and 3% for FY10 on lower margin expectation and corresponding earnings are cut by 23%. IDEA trades at 14.7x FY09E EPS and 6.9x FY09E EV/EBITDA. We have downgraded to Neutral based on (1) higher-than-expected pressure on margins from new launches, (2) low return ratios - RoE of 12% and RoIC of 10%, and (3) FY08-10E EPS CAGR of only 9% v/s 24% forecast earlier," says Motilal Oswal's research report.

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Source: Moneycontrol

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