Spice Comm
CMP: Rs 55
Target price: Rs 70
Citigroup has initiated coverage on Spice Communications with a buy recommendation as the telecom entity is in the process of ramping up coverage in Punjab and Karnataka. Moreover, we believe its suitability as an M&A target provides the icing on the cake, adds the report. Access to 900 MHz and its small footprint make it an attractive and probably the only M&A candidate, explains the foreign brokerage. New spectrum rules may dilute M&A prospects a bit, but on the flip side provides a chance to enter new circles, though constrained by size and management bandwidth, it adds.
However, the report adds that while new circle rollouts are possible if new spectrum norms are accepted by the department of telecom (DoT), Spice will remain constrained by its balance sheet size as well as management bandwidth. Citigroup has set a 12-month price target at Rs 70 per share. Incidentally, the price target includes a 15% M&A premium. We believe that the scope for merger/acquisition between Spice and other telcos such as Idea, RCOM and Aircel still exists, says Citigroup.
CMP: Rs 55
Target price: Rs 70
Citigroup has initiated coverage on Spice Communications with a buy recommendation as the telecom entity is in the process of ramping up coverage in Punjab and Karnataka. Moreover, we believe its suitability as an M&A target provides the icing on the cake, adds the report. Access to 900 MHz and its small footprint make it an attractive and probably the only M&A candidate, explains the foreign brokerage. New spectrum rules may dilute M&A prospects a bit, but on the flip side provides a chance to enter new circles, though constrained by size and management bandwidth, it adds.
However, the report adds that while new circle rollouts are possible if new spectrum norms are accepted by the department of telecom (DoT), Spice will remain constrained by its balance sheet size as well as management bandwidth. Citigroup has set a 12-month price target at Rs 70 per share. Incidentally, the price target includes a 15% M&A premium. We believe that the scope for merger/acquisition between Spice and other telcos such as Idea, RCOM and Aircel still exists, says Citigroup.
