Buy’ on Idea – Target Price Rs.120

 ‘Buy, call on Idea Cellular is maintained with a higher target price of Rs.120 over one year, as against the earlier target price of Rs.110.
 Idea has gained revenue market share in every circle of its operation in the last three years and has been a pure GSM operator.
 The company has the highest proportion of active and rural subscribers, which will enable the company to outperform its peers.
 Low mobile penetration in rural India (around 35%) and rising rural income may help telecom operators to penetrate the rural market and raise tariff rates.
 An analysis has revealed that the company has increased its revenue market share in each of its 22 circles in the last three years.
 The stock appears to be the top pick to play in the improving outlook for the Indian telecom sector.
 The company is expected to report 29% CAGR in revenue growth, 32% CAGR in EBITDA and 42%
CAGR in EPS, which appears to be the highest in the telecom industry.
 Company’s capex intensity is likely to moderate as much of the capex for 3G has been taken care of in FY12.
 TP has been hiked to Rs.120 from Rs.110 because of higher earnings estimates.
 The target price is at 7.5 multiple of FY13 expected EV/EBITDA.