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NewsOSK Research keeps Buy on Axiata, TP RM5.77
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OSK Research keeps Buy on Axiata, TP RM5.77
by hlk Tue 02 Aug 2011, 13:37
KUALA LUMPUR: OSK Research said Axiata Group Bhd’s 19.1% associate in India, Idea Cellular reported strong 7% on-quarter(+24% on-year) and 12% on-quarter (+36% on-year) rise in revenue and EBITDA to Indian rupees 45.2 billion and 12 billion rupees respectively for 1QFY12.
The research house said on Tuesday, Aug 2 that despite the strong growth in revenue and EBITDA, Idea’s 1QFY12 earnings were crimped by maiden 3G amortization and interest costs totaling 1.88 billion rupees as it launched 3G during the quarter.
OSK Research said this led to a 35% on-quarter (-12% on-year) decline in reported profit. Stripping-out the 3G related costs, Axiata would have reported a 13% on-quarter (54% on-year) increase in earnings.
“We are keeping our BUY recommendation on Axiata based on SOP target price of RM5.77.
“We view positively the recent spate of tariff hikes in India as it should mitigate pressure on EBITDA margins and contribute towards stronger revenue growth going forward on the back of the sustained increase in call traffic. Idea contributes less than 10% of Axiata’s net profit and only 4% of our SOP on the group,” it said.
The research house said on Tuesday, Aug 2 that despite the strong growth in revenue and EBITDA, Idea’s 1QFY12 earnings were crimped by maiden 3G amortization and interest costs totaling 1.88 billion rupees as it launched 3G during the quarter.
OSK Research said this led to a 35% on-quarter (-12% on-year) decline in reported profit. Stripping-out the 3G related costs, Axiata would have reported a 13% on-quarter (54% on-year) increase in earnings.
“We are keeping our BUY recommendation on Axiata based on SOP target price of RM5.77.
“We view positively the recent spate of tariff hikes in India as it should mitigate pressure on EBITDA margins and contribute towards stronger revenue growth going forward on the back of the sustained increase in call traffic. Idea contributes less than 10% of Axiata’s net profit and only 4% of our SOP on the group,” it said.
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