Idea (SELL): Continues to surprise... - Ambit

Idea reported strong results, with a better-than-industry revenue growth of 7.9% QoQ driven by higher RPMs and subscriber additions. The company's EBITDA was significantly ahead of our and consensus estimates (by 17% and 16% respectively). EBITDA margins expanded by 415bps QoQ driven by higher RPMs (up 6.1% QoQ) and significantly lower subscriber acquisition costs (lower by 9.4% QoQ). Idea's sharp QoQ reduction in roaming and subscriber acquisition cost may not be sustainable. Indeed, the 2% decline in MoU suggests its price sensitive customers displayed negative price elasticity to the discount reductions. Idea also announced a $125mn pref issue to Axiata and took approvals for a $500mn QIP. While are likely to upgrade our estimates a tad, current valuations over 8x EV/EBITDA price in most positives. We stay Sellers.

Source : Equity Bulls

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