RCom tanks 22% on BSE

RCom tanks 22% on BSE
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First Published: Fri, Aug 01 2008. 11 26 AM IST
Updated: Fri, Aug 01 2008. 11 26 AM IST
PTI
Mumbai: Shares of Anil Ambani-led Reliance Communications plunged as much as 22% in the early morning trade on the Bombay Stock Exchange, a day after the telecom firm reported its first quarter results.
Shares of the company opened at Rs500.05, and dropped to touch an intra-day low of Rs410.05, down by Rs90 or 21.95 per cent over previous close.
The scrip was trading at Rs439.65, down 12.08% in the morning trade on the BSE, and 59.41 lakh RComm shares had changed hands at 1100 hrs.
“The Q1 EBIDTA came in 10% below estimates as wireless was hit by continued lack of elasticity,” global financial services major Citigroup said in a research note.
The ADAG firm had reported a 23.9% jump in its first quarter net profit at Rs1,512 crore, on the back of a sharp growth in subscriber base.
“RCom’s whole-hearted participation in wireless growth is contingent on consumer mix change through the GSM foray, key for re-rating but some time away and not without risks,” Citigroup said in its report.
“However, the decline in wireless is partially offset by global EBITDA, which benefits from the significant rupee depreciation,” it added.
Meanwhile, Citigroup has cut its estimates for FY09-10 EBITDA by 13% to reflect lower revenue per minute in line with peers, lower elasticity, staggered rollout of GSM and higher net debt that is partly offset by accounting change on translation losses or gains and lower tax rates.
Further, it believes that the returns from RCom’s heavy investment in the global business might be back-ended.
“The hive-off of towers in a separate company (RTIL) has business potential with increasing number of operators, and could unlock value in the medium term,” it added.
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First Published: Fri, Aug 01 2008. 11 26 AM IST