Idea Cellular - Volume cheers... - ICICIdirect

Recovering from the weak quarter of Q2FY13, Idea surprised us with a better-than-expected topline but disappointed on the margin front. The topline grew 5.0% QoQ to Rs.5578.6 crore (I-direct estimate - Rs.5426.9 crore) driven by 5.2% growth in traffic. ARPM, however, fell marginally from 41.3 paisa to 41.1 paisa due to lower contribution of non-data VAS revenue.

As a process of weeding out its inactive subscribers, the subscriber base of the company fell to 113.9 million from 115.5 million. EBITDA margins, however, disappointed, falling 36 bps to 26.4%, pulled down by higher network operating and subscriber acquisition costs. PAT stood at Rs.228.6 crore (I-direct estimate - Rs.261.0 crore), down 4.8% QoQ, which included a forex loss of Rs.13.3 crore. The voice ARPM has grown owing to reduction in promotional schemes. This would continue to drive ARPM, going forward. Also, with the next round of auctions by March 2013, most of the regulatory uncertainties would be done away with.

We expect the EPS of the company to more than double in FY12-15 to Rs.5.6. We maintain our HOLD rating with a DCF based price of Rs.120.

Source : Equity Bulls

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