RCOM...A BUY...????

Higher FCF to improve RCom balance sheet: Axis Capital| Published: Aug 29 2014, 02:24 ISTSUMMARYRecent QIP and warrants issue helped RCom raise Rs 6,100 crore (~15% of FY14 net debt).Recent QIP and warrants issue helped RCom raise Rs 6,100 crore (~15% of FY14 net debt). Funds are expected to be primarily utilised for repaying high-cost rupee debt (which was ~35% of total debt in FY14)More deleveraging initiatives expected to unfold. We value Globalcom at 5.5x FY16E EV/Ebitda (in line with average for global peers). It has leadership in carrier, enterprise, and voice businesses.We assume ~Rs 6,000 crore from securitisation of tower rentals (likely to accrue in H2CY14). Major assets include 135 acres at DAKC (Dhirubhai Ambani Knowledge Centre), Navi Mumbai, and 4 acres of prime property at Connaught Place, New Delhi. DTH has 4.8 million subscribers, valued at 20% discount to Dish TVHigher FCF generation to further improve balance sheet. Higher Ebitda and capex-light strategy to generate better cash flows. Going forward, Ebitda growth will be led by GSM outpacing CDMA (which has stabilised). RCcom has low regulatory payout at $441 million (considering absolute payments over 10 years). However, present value (PV) is just $255 million. Upfront payment in 2016 is likely to be $65 millionIf RJio opts for underlying network of RCom (2G intra-circle roaming arrangement for voice capability). Stable regulatory environment and consolidation among Top 5 telcos (may lead to better tariffs).Axis Capitalhttp://www.financialexpress.com/news/higher-fcf-to-improve-rcom-balance-sheet-axis-capital/1283403................TECHNICALLY THE STOCK SHALL NOT FALL BELOW 98-102 RANGE ON ANY GIVEN DAY...THE STRICT STOP LOSS SHALL BE AT 92 LEVEL.......THE STOCK IS IN THE CONSOLIDATION PHASE AND ONE SHALL ACQUIRE IN SMALL QUANTITIES FROM 104-98 AND WHEN BOUNCES ABOVE 118-120 THE LARGE CHUNK CAN BE ACQUIRED FOR LONG-TERM GAINS.......THE HIGH BETA STOCKS ARE ALWAYS RISKY WHEN THE MARKET FALLS....SO IS RCOM...........