Idea Cellular Ltd.


Quarterly Financials

June 27th, 2018

Shareholders have approved name change to Vodafone Idea Ltd. Which will take effect only once the merger is approved DoT(Department of Telecom).


Shareholders have approved NCD issue of Rs 15,000 cr on private basis.This is to strengthen combined balance sheet . They have already raised approx Rs 22,000cr prior to this.


DoT approval is only issue pending which might take a month if they raise the charges required to Rs 11,000 cr on which decision is likely this month. But it will be challenged by the companies and given a stay in court most likely.


On the ground the teams are not waiting for the approvals the new management in charge have already started working on synergies and other marketing push initiatives. Which makes us positive on the same.


Recommend : ADD Weight

Portfolio Allocation : Pre - 3% Post 4%

BUYING PRICE LIMIT : Rs 65/share


May 14th , 2018

We are making analysis on the combined entity as we are optimistic that once listed it will receive a higher valuation than Idea standalone valuation currently. Thus , we see an buying opportunity.


Currently , Idea lacks mainly two things the deep pocket to fight competition and growth of revenue from data usage. Merger with Vodafone will be able to remove this two issues and increase the EBITDA as rationalisation in recurring expenses takes place , this is already in process by reducing employee count.


Taking into calculation of Idea market cap being its valuation of the combined entity. The combined entity market cap will be Rs 1,06,000 cr ( approx.) which is 4x EBITDA FY 16 as compared to Airtel which is trading at 7x EBITDA FY 16.


RECOMMENDATION : BUY

PORTFOLIO ALLOCATION : 2%

BUYING PRICE LIMIT : Rs 65/share