Reliance Communications (RCOM) has prepaid Rs5,000 crore term loans raised from various domestic and foreign banks, less than a year ago, for three to five year terms.
In the process, the company has saved annual interest costs of about Rs700 crore. The telco has paid back the loans from internal accruals.
As on 30 June, 2009, the company had a debt of over Rs22,000 crore, which has now come down to over Rs17,000 crore. RCOM wants to reduce its interest outgo by judiciously repaying the term loans, which will strengthen its balance sheet.
We maintain a BUY on the stock, with a target price of Rs329.