IIFL has recommended a buy rating on Reliance Communication with a target price of Rs 250 in its March 31, 2009 research report.
“RCOM’s execution skills will come into focus now that regulatory churn has subsided. The company has got off to a smart start with its wireless broadband launch, which has potential to create significant earnings upside. The initial start in GSM has been promising, with 6-7 million subscribers acquired in just two months, though incremental GSM spectrum will need not just subscriber count, but traffic/sub at 40 millio erlang also. Feedback from industry sources suggests that the bulk of RCOM’s GSM capacity is almost operational.”
“We expect the company’s capex needs for FY10 at USD 2.3 billion, well below the company’s guidance of USD 3 billion. Rupee depreciation against USD, potential interest cost increase and possible slowdown remain key risks. We raise our target price by 13% to Rs 250. ‘BUY’, says IIFL’s research report.
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