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Unformatted text preview: c om pany has been trying to reduc e debt for the las t few quarters . It is als o attem pting to
reduc e the interes t burden by entering into big-tic ket c om m erc ial m ortgage-bac ked s ec urities
deals . Als o, new projec ts launc hed by the c om pany have rec eived a better-thanexpec ted
res pons e. The exis ting projec t pipeline and im provem ent in exec ution will ens ure that the
c om pany is well-plac ed when the s ec tor rebounds .
Indiabulls Re al Estate
Debt levels appear to have peaked as expec ted c as h flow helps the c om pany pare debt.
Im proving earnings and c as h flow earnings are pos itive for the s toc k.
The c om pany's pipeline of ultra-luxury projec ts not only m akes it relatively im m une from
ec onom ic s luggis hnes s but als o inc reas es the c hanc es of s ignific antly higher c as h flows in
the next few quarters . T ELECOM
"M argins will inc h up as c ontribution of data to the ov erall rev enue
ris es "
Dev en Chok s ey , M anaging Direc tor, KR Chok s ey Sec urities
The year 2013 has been a gam e c hanger for the telec om indus try.
The governm ent not only tried to reduc e regulatory hurdles by
ens uring c larity on is s ues s uc h as m ergers and ac quis itions but
als o inc reas ed the foreign direc t inves tm ent lim it in the s ec tor from 76% to 100%. Als o, the
approval by the em powered group of m inis ters to a propos al for reduc ing s pec trum pric es by
businesstoday.intoday.in/stor ypr int/201839 16/18 1/2/14 M ar ket exper ts on what to expect fr om var ious sector s in 2014 : Business Today 25-50% will lower c os ts .
The indus try went through one of its wors t periods in rec ent tim es as c ut-throat c om petition
and regulatory m es s brought down operating m argins from 40% to 25%. Firs t, dis c ounts by
new entrants forc ed the es tablis hed c om panies to reduc e tariffs . Then c am e the c ourt trial in
the s pec trum alloc ation s c am , whic h brought all polic y-m aking under a c loud, forc ing the
Suprem e Court in 2012 to c anc el a total of 122 telec om lic enc es .
Fortunately, the indus try is c om ing out of the woods . Com panies have dis c ontinued the
s ervic es of inac tive and low-value s ubs c ribers and s hifted foc us to ac tive and revenuegenerating s ubs c ribers . Com petition has eas ed, leading to inc reas e in tariffs . The num ber of
data s ervic es s ubs c ribers , who generate dec ent revenues , has been growing 30% on a
quarter-on-quarter bas is .
Reform s , es pec ially the c larity on M&As rules , will lead to c ons olidation and, thus , an
inc reas e in revenue for the bigger c om panies . Margins will inc h up as c ontribution of data to
the overall revenue inc reas es . Bharti Airte l
T arge t price : Rs 390
The m arket leader ac c ounts for 28% s ubs c ribers and 30% revenue. Its voic e s egm ent is
s howing healthy revenue growth, led by an inc reas e in s ubs c ribers and revenue per us er.
Blended operating m argin is als o ris ing, led by c os t rationalis ation of India operations and
higher Afric a m argins . Im provem ent in key perform anc e indic ators will s upport revenue
growth. Data s ervic es c ontinue to s how grow on both s ubs c riber and revenue per us er
fronts . W e rec om m end a 'buy' on the s toc k with a pric e target of Rs 390, an ups ide of 16%
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- Spring '14