Financial Restructing
Autor: Ramesh Singh • February 18, 2016 • Research Paper • 1,227 Words (5 Pages) • 738 Views
India is the second-largest telecommunications market, with over 1.0 billion subscribers as of May 2015. The wireless segment (97.36 per cent of subscription market) dominates the market. It has also been growing at a very high rate. In FY07-15, wireless subscriptions witnessed a CAGR of 24.78 per cent to 969.8 million. . It is the second largest country in terms of internet users. India had 267.39 million internet subscriptions as of December 2014.
Key Players and their financial Analysis
Idea
In the recent spectrum auction, Idea successfully secured spectrum in nine service areas due for license expiry in December 2015-April 2016, ensuring continuity of existing business for its 107.6 million subscribers (which forms 68% of customer base). Also, the license is going to expire in 2021, reducing the effect of auction related overhang in medium term. The threat from Reliance Jio and some price volatility in the market continues to linger on the sector. However, I feel 4G is at a very nascent stage with very few 4G handsets currently and Jio as 4G as primary offering may only be able to penetrate deeper at a gradual pace.
Year |
| Mar 14 | Mar 13 | Mar 12 | Mar 11 | |
D/E Ratio | 1.21 | 1.09 | 0.93 | 0.9 | 0.72 |
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Idea’s average long term debt to equity ratio over the last 5 financial years has been 0.91 which shows that the Company operates with high level of debt and is not placed well for economic slowdowns. Idea’s average interest coverage ratio over the last 5 financial years has been 7.75 indicates that the Company can meet its debt obligations without any difficulty.
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Close | 170.1 | Min Close Price | 140 |
Max Close Price | 202.75 | 52 Week Range | 140-202.75 |
In its latest stock exchange filing dated 31 March 2015, Idea reported a promoter holding of 42.27 %. This indicates conviction and sincerity of the promoters. We believe that a greater than 35 % promoter holding offers safety to the retail investors.
Institutional holding in the Company is at 29.23 % (FII+DII). Large institutional holding indicates the confidence of long term investors. Same time, it can also lead to high volatility in the stock price as institutions buy and sell larger stakes than retail participants.
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