Sell Tata Communications, target of Rs 457: Asit C. Mehta
Asit C. Mehta has downgraded its rating on Tata Communications to sell from hold with a price target of Rs 457 in its may 12, 2009 research report.
“Tata Communications’ business mix is progressively shifting towards enterprise data business, leading to steady revenue growth and EBITDA margin expansion. Although DoT has decided to hold simultaneous auctions for 3G as well as WiMax spectrum, there is still no clarity on the timing. Therefore, we believe that growth in this segment will depend on getting spectrum in the 2.5GHz in the imminent BWA and 3G auctions. The core voice business also continues to face pricing pressure. Another concern is the high debt level.”
“Given the economic slowdown, coupled with the uncertainties faced by the company and the high debt levels, we downgrade our recommendation to ‘SELL’ from ‘HOLD’. On assigning the lower P/BV of 2.3 (which is consistent with the valuation of foreign peers) to FY11E book value of Rs 199, we arrive at our price target of Rs 457,” says Asit C. Mehta’s research report.
Tags: asit c mehta, brokerage calls, sell rating, Tata Communications
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