Buy Reliance Communication
Reliance Comm
CMP: Rs 646
Target Price: Rs 873
Goldman Sachs has maintained its ‘buy‘ rating on Reliance Communication (RCOM) based on the proposed listing of its tower subsidiary which could unlock value. Reliance Infratel, the tower subsidiary of RCOM, has filed a DRHP with Sebi for an IPO.
“We view the potential listing of Reliance Infratel as a positive catalyst for RCOM – one which we have highlighted in our investment thesis for the stock. Our Rs 873 per share target price for RCOM includes a valuation of $ 4.6 billion for the tower company.”
It has, however, listed some key risks that include delay in nationwide rollout of GSM services beyond the second half of financial year 2009, poor external tenancy on towers and lower-than-expected traffic elasticity yields sub-par wireless operating metrics
