The Idea Cellular stock fell in trade today even as the telco reported its first quarterly net profit after six quarters of losses in its last financial result before merger with Vodafone India. The stock closed 6.33% lower at 54.75 on the BSE. It hit an intra day low of 54.40 in trade today.
The stock is down 40.92% during the last one year and nearly 50% since the beginning of this year.
The Aditya Birla Group firm reported net profit of Rs 256.5 crore in the June quarter, mainly on account of one-time gain from sale of mobile towers.
The sale of its mobile towers to American Tower Corporation in the reported quarter for Rs 3,364.5 crore, an exceptional item, rescued the company from posting another quarter of loss, it said in a statement.
The company posted loss of Rs 814.9 crore in the same period a year ago. However, the net profit announcement could not prevent the stock from plunging over 6% in trade today.
The fall came after brokerage CLSA downgraded the stock from 'Buy' to 'Sell' and lowered its target price to Rs 51 from Rs 70. It cut FY19-21 estimates of the firm from 2%-22%.
Jefferies too cut its price target to Rs 50 citing muted Q1 results. The brokerage said weaker balance sheet and integration woes would limit its ability to effectively compete with peers on high ARPU data subscribers. We expect it to lose revenue market share. Expect ARPU to see further pressure over the next 12 months given rising competitive intensity in the postpaid and voice segments.
Of 25 brokerages covering the stock, 7 rate it "buy" or higher, 6 "hold" and 12 "sell" or lower, according to Reuters.
Fall in key earnings metrics
Underperformance in areas of other key earnings metrics also hit the stock in trade today.
Blows from turbulent tariff war were, however, visible on its operational performance.
The company registered a consolidated loss of Rs 2,757.6 crore before tax and exceptional items during the quarter.
"During first quarter of 2019, Indian mobile industry continued to decline under pressure from heavily discounted unlimited voice and bundled data plans and subsidised 4G feature phone offerings from one of the operator, forcing commensurate response from other existing mobile operators to retain subscribers," Idea said in its report.
The consolidated revenue from operations of Idea fell by around 28 per cent to Rs 5,889.2 crore during the first quarter of the current fiscal compared to Rs 8,166.5 crore in the same period last fiscal.
The impact of tariff was reflected in decline in average revenue. The revenue realisation from services almost halved on year-on-year (YoY) basis to 16.5 paisa from 32 paisa.
Idea reported slight dip in subscriber base to 187.9 million from 189 million on Y-o-Y basis.
The average revenue per user of the company declined by 29 per cent to Rs 100 from Rs 141 during the period under review.
During the reported quarter, Idea invested Rs 980 crore on networks, majority of which was utilised for 4G expansion. The standalone net debt of the company stood at Rs 50,580.5 crore at the end of the reported quarter.
Written and edited by Aseem Thapliyal