Tulip Telecom - Balance sheet concerns remain, Retain REDUCE - Emkay

Reco: REDUCE
CMP: Rs 104
Target Price: Rs 92

- Q5FY12 results - Revenues at Rs7.2bn (up 9.6% YoY), EBITDA at Rs1.9bn (up 3.9% YoY) & APAT at Rs547mn (-29% YoY)

- Recovery in revenue was led by improved pricing and is in contrast to management's commentary on pricing pressure, flat revenue growth & margin decline in near term.

- Going forward, we believe pricing pressure would prevail due to tough macro environment. Slow progress in DC order inflow & continued investment remains a concern.

- FCCB redemption of ~Rs7.8bn to be funded via Rs4bn (fresh debt + internal accruals) and fresh issue of US$100mn (already recd. commitment for $50mn). Our estimates do not factor in any dilution. Retain REDUCE with TP of Rs92.

Source : Equity Bulls

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