Idea - Consolidated Q3 FY2014 results - First Cut - Microsec

Idea Cellular Ltd (Idea) announced its consolidated Q3 FY2014 results on 27 January 2014. While the company's top line came in line with Bloomberg Consensus Estimates, its bottom line slightly lagged estimates.

While Idea's top line increased 4.6% sequentially to Rs. 6,613.1 Crores, its bottom line expanded 4.5% q-o-q to Rs. 467.7 Crores in Q3 FY2014. Growth in the company's top line was led by a healthy performance of its Mobility Business. Driven by strong growth in Minutes of Usages and Data volume, the Mobility segment revenues jumped 4.9% q-o-q to 6,536.2 Crores in Q3 FY2014. In addition, slight improvement in Average Revenues Per User (ARPU) levels aided to the growth in Mobility segment's top line. On Data front, Idea stopped reporting incidental data users in its total Data User base, which led to a decline in total data users to 25.5 Mn in Q3 FY2014 from 30.91 Mn users a quarter earlier. The company's Mobile Data ARPU improved significantly to Rs. 91 during the quarter from Rs. 54 in Q2 FY2014.

However, Idea reported a slight reduction in Earnings before Interest Depreciation Tax and Amortization (EBIDTA) margins primarily due to increased roaming and access charges. Nevertheless, lower finance and treasury charges kept the Net Profit Margins intact. Furthermore, the company's Cash Profit remained healthy at Rs. 1,566.3 Crores during the quarter , which helped it to keep the Net Debt at reasonable levels of Rs. 8,945.8 Crores in Q3 FY2014.

We are encouraged by Idea's healthy quarterly numbers and expect its performance to remain steady in the upcoming quarters as well. Furthermore, emerging clarity on regulatory front and the expectations of rational bidding in upcoming spectrum auctions are likely to remain positive for the sector. Hence, investors can accumulate the stock at current juncture.

Source : Equity Bulls

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