Indiabulls Securities puts ‘buy’ on RCOM
Indiabulls Securities has upgraded Reliance Communications (RCOM) to ‘buy’ as it feels that the stock trades at steeper-than-warranted discounts, which ignores the robust growth of the Indian mobile subscribers and RCOM’s brand equity. The broking house says, “Aggressive pan-India GSM services roll-out would boost RCOM’s market share to 20% by financial year 2010.
We expect RCOM to edge out other entrants in subscriber net additions, capitalising on a prominent presence in 22 circles and high-brand recognition.” The note says that its discounted cash flow (DCF)-based sum of the parts (SOTP) valuation suggests a fair value of Rs 324, which provides a significant upside from the current price.
RCOM’s net sales grew 5.9% quarter on quarter to Rs 5,540 crore on the back of healthier global revenues and better operational metrics. “We believe that RCOM will continue to trade at a discount to Bharti due to the latter’s above-average financial metrics, but the current discounts are steeper-than-warranted.
cmp: Rs 228
target price: Rs
324
source: Economictimes
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