Citigroup downgrades Reliance Communications to ‘hold’
Citigroup has downgraded Reliance Communications to ‘hold’, citing subdued first quarter and falling capital productivity.
By ET Bureau |
CMP: Rs 438.45
Target Price: Rs 530
Citigroup has downgraded Reliance Communications to ���hold���, citing subdued first quarter and falling capital productivity.
Its new target is Rs 530. Essentially, it has cut its FY09-10E EBITDA estimates by 13% and EPS by 14-18% to reflect a host of factors. Chief among them are lower revenue per minute in-line with peers, lower elasticity, staggered rollout of GSM and higher net debt.
It notes that the company registered a weak first quarter EBITDA, as wireless was hit by continued lack of elasticity. It expects this trend of low CDMA elasticity to continue to dominate RCOM���s rations till GSM launch. It also says that the company���s $5.5 billion capex (FY09) and $4 billion (FY10) would lead to a net debt of Rs 170 billion in end-2009 (Rs 130 billion on June-2008).
It signs off saying no triggers in the near term. ���RCOM���s wholehearted participation in wireless growth is contingent on consumer mix change through the GSM foray, key for rerating, but some time away and not without risks,��� said Citi in a note to its clients.
Target Price: Rs 530
Citigroup has downgraded Reliance Communications to ���hold���, citing subdued first quarter and falling capital productivity.
Its new target is Rs 530. Essentially, it has cut its FY09-10E EBITDA estimates by 13% and EPS by 14-18% to reflect a host of factors. Chief among them are lower revenue per minute in-line with peers, lower elasticity, staggered rollout of GSM and higher net debt.
It notes that the company registered a weak first quarter EBITDA, as wireless was hit by continued lack of elasticity. It expects this trend of low CDMA elasticity to continue to dominate RCOM���s rations till GSM launch. It also says that the company���s $5.5 billion capex (FY09) and $4 billion (FY10) would lead to a net debt of Rs 170 billion in end-2009 (Rs 130 billion on June-2008).
It signs off saying no triggers in the near term. ���RCOM���s wholehearted participation in wireless growth is contingent on consumer mix change through the GSM foray, key for rerating, but some time away and not without risks,��� said Citi in a note to its clients.
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