Analysts' Picks: Reliance Comm

RELIANCE COMM

CMP: RS 436.80

TARGET PRICE: RS 530

Citigroup has downgraded Reliance Communications��� rating to ���hold���from buy while lowering its price target to Rs 530 from Rs 760, postfirst quarter results.

���Though RCOM has been benefiting from the continued wireless growth in India, it has been constrained by the CDMA network in terms of market share and elasticity. The change in consumer mix and market share gains depends on the proposed GSM foray ��� beginning end-2009 ,��� the investment bank said in a client note.

���Competitive pressures, though intense, should continue to be rational. Yet, there are inherent risks in the execution of the dual-network strategy (i.e. cost duplication, low market share gains) that cannot be wished away,��� Citi said. ���The hive-off of towers in a separate company (RTIL) has business potential with increasing number of operators, and could unlock value in the medium term,��� it added.