What was that again? RCom now
Here's the next one in the 'What was that again?' series (to see the previous post, click here)
This one though, the analyst has been smart enough to own it upfront, so sympathies for the brave act. This is an analyst revising reco on Reliance Communications
Downgrade to REDUCE – where were we wrong?
Suggesting a BUY at INR300 levels and now a REDUCE at INR180 levels is not ideal from our perspective and was not expected either. We focussed on business fundamentals like upside in its fixed business, spectrum advantage in mobiles, sale of towers and declining debt profile; however, these have been overshadowed by rising competitive intensity, regulatory overhangs, constant concerns over the quality of earnings and audit on subscriber numbers. We had normalised for various one-offs using 20-30% lower numbers than the reported for our forecasts, but these proved conservative. We believe operational/regulatory overhangs will continue to be a drag on shares; hence, we downgrade to REDUCE