CMP: Rs 48.35
Target price: Rs 53
CLSA has maintained its ‘outperformer’ rating on Idea, with price a target of Rs 53, as it feels the company’s stronger balance sheet would support valuations. “Idea’s balance sheet has improved significantly with Telekom Malaysia’s Rs 73 billion cash injection (a 15% preferential placement) and another Rs 21 billion from its stake sale in ABTL (Aditya Birla Telecom), with 3QFY09 net debt/equity of 0.18 times (against 1.8x in 1QFY09),” the investment bank said in a report. “The company’s aggressive expansion strategy and inferior margins for its Spice Communications business have compressed margins, but the big improvement in its balance sheet and strong valuation benchmarks from recent deals for start-ups, will support the stock,” the report added.
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