Buy Idea Cellular - Indus Tower IPO to unlock value

 Idea cellular is india's 4th larget telecom operator behind Bharti airtel, Vodafone an Reliance with more than 90 million subscribers. At the current rate of subscriber addition the company will reach 100 million subscriber mark by August 2011.

The company has 16% stake in Indus tower which is the world's larget telecom tower company  and its valuation is estimated to be approximately Rs. 55,000 crores. So idea's stake in Indus tower is worth approximately Rs. 8,800 crores.

At the CMP of Rs. 70 the company commands a market cap of approx. Rs.23,000 crores. Excluding its stake in Indus tower the company is available at a value of just
14,200 crores. Idea Cellular is expected to clock a revenue of at least 20,000 crores in FY-2012. The 3G rollouts is likely to improve its revenue and profitability further. Also Idea cellular has attracted maximum number of MNP switches which establishes its position in the Indian telecom market.

With policy related issues getting over and the Indus tower IPO happening, the company would see a rerating in its stock which is currently trading at a significant discount to its intrinsic value. So investors with at least 2 years horizon can enter the stock with a possible appreciation of more than 60-70 %.


Amit Agarwal said...

The stock is up 17% since InvestorZclub recommended it at Rs. 70 on 7th June 2011.

Best of luck!!

Amit Agarwal said...

The stock has crossed 180 levels as on 11th October 2013, nearly 160% from the recommended price, in 2.3 years. The majority of re-rating as expected seems to be done for the moment and the stock could consolidate for some time. Since the valuation is no longer that attractive, people who are into this stock can choose to exit the stock in tranches at every rise.

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