The broking house CLSA has downgraded Idea Cellular to sell from buy and cut target to Rs 51 from Rs 70 per share.
Shares of Idea Cellular declined 5.4 percent in the early trade on Tuesday as CLSA downgrade the stock to sell and cut target price to Rs 51 per share.
The company has turned profitable in the quarter ended June 2018 as it has posted consolidated net profit at Rs 256.5 crore against loss of Rs 962.2 crore reported in March 2018.
The company's profit has included one-time gain on sale of its entire shareholding in Idea Cellular Infrastructure Services to ATC Telecom for Rs 3,364 crore.
However, the loss before tax and exceptional items was at Rs 2,757.6 crore.
Revenue of the company was down 4 percent at Rs 5,889.2 crore. The operating profit or EBITDA fell 54.4 percent at Rs 659.4 crore and margin was down at 11.2 percent. The average revenue per user (ARPU) for the quarter was at Rs 100 against Rs 105 in Q4FY18.
The broking house CLSA has downgraded Idea Cellular to sell from buy and cut target to Rs 51 from Rs 70 per share.
According to CLSA, the Q1 revenue is in-line, but EBITDA is below estimates, while operating metrics were also weak.
It expect net debt to be 6.6x EBITDA by FY21 and will still remain uncomfortable.
Kotak Securities has maintained reduce rating on Idea Cellular with target of Rs 75 per share.
The company's Q1 earnings are weaker than expected, also much weaker than Bharti’s on most operating metrics, said Kotak Securities.
Equity infusion, a meaningful one, could be needed sooner than expected, it said.
At 09:24 hrs Idea Cellular was quoting at Rs 57.60, down Rs 0.85, or 1.45 percent on the BSE.
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