Idea Cellular - Q4FY2013 Result Update - Nirmal Bang

- Idea Cellular (ICL) 4QFY13 revenue was above our/consensus estimates by 3.4%/4.2%, respectively, at Rs60.6bn (up by a strong 8.7% QoQ). This was led by an 8.5% QoQ rise in minutes of usage (MoU), with MoU per user surging 5.7% QoQ.

- However, revenue per minute (RPM) remained flat at 41.2 paise, as voice RPM actually declined 0.6% QoQ. EBITDA margin surged 119bps QoQ to 27.6%, above our/consensus estimates by 43bps/99bps, respectively, due to operating leverage, and lower network and access charges. This, along with lower interest costs led net profit to surge 34.8% QoQ at Rs3.08bn (6.1%/14.4% above our/consensus estimates, respectively).

- The strong MoU growth, we believe, was partly a result of some newer operators shutting down operations and, in our view, it is unlikely to sustain.

- Key regulatory issues remain a bugbear and we do not believe it is prudent to change our view on the stock purely on the basis of good performance in just one quarter.

- We have retained our Sell rating on the stock with a revised target price of Rs107 (Rs93 earlier), rolling over our sum-of-the-parts (SOTP) target to FY15E earnings.

Source : Equity Bulls

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