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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

Vodafone Idea

BSE ID : 532822     NSE ID : IDEA

RECOMMENDED PRICE 155.20

PEAK FROM RECO 125.60 -19.07%

CURRENT PRICE 12.97 Resource id #18

Idea Cellular is the fastest growing Indian telecom player with an aggregate market share of 17.1 percent. We initiate a 'BUY' on the stock with a target price of Rs 210 with the medium to long term investment horizon.

Idea Cellular

Idea Cellular, a part of Aditya Birla group, is one of India's leading GSM mobile services operator. This telecom company has licenses to operate in all 22 service areas. The company also offers value-added services like GPRS, call conference, GSM, GPS and also provides customized solutions according to business specific needs.

The company has registered excellent results for the quarter ending September 2014. The revenues from operations grew by about 20 percent to Rs.7569.92 crores vs. Rs.6323.26 cr. in the year ago quarter while it grew ~0.12 percent QoQ. Operating profit climbed sharply by ~49 percent at Rs.1311.92 crores in Q2FY15 as against Rs.878.59 crores in the Q1FY15. The adjusted net profit stood at Rs.755.88 crore in the Q2FY15 as against Rs.447.61 crore in the previous quarter; registering a sharp growth of ~69 percent. On the margins front, operating margin climbed about 571bps at 17.33 percent as against 11.62 percent on QoQ, while net profit margin expanded 407bps at 9.99 percent from 5.92 percent QoQ. EPS Stood at Rs.2.11.

Valuation

Idea Cellular is the fastest growing Indian telecom player with an aggregate market share of 17.1 percent. Its revenues have grown at a CAGR of 18.60 percent over Q1FY12 to Q1FY15, outperforming the industry which has grown at a CAGR of 10.70 percent over the same period. Its market share over the same period has seen a substantial improvement from 13.90 percent in Q1FY12 to 17.1 percent in Q1FY2015. Growing revenues; improving balance sheet and increasing market share in a highly competitive market is remarkable; depicting the company's strong execution and brand-building capabilities. We continue to believe that the Indian voice and data market is likely to improve and Idea Cellular with its strong brand equity and superior execution capabilities would ride on the rising wave of this market. Hence we hold a positive view on the company as it is trading at an attractive valuation at 20x and 19x of FY15EPS of Rs.7.58 and FY16EPS of Rs.8.09. We initiate a 'BUY' on the stock with a target price of Rs.210 (appreciation of about 35 percent) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclosure of Interest Statement - Company Name

1. Analyst Ownership of the Stock - No
2. Hem & its Group Company Ownership of the Stock - Yes
3. Hem & its Group Companies' Director Ownership of the Stock - Yes
4. Broking relationship with company covered - No

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification: The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

IdeaCellular_Multibagger_HemSec.pdf

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