Reliance Communications: Q2 FY11 Results Are Positive

RCom Q2 FY11 Results are positive, and the stock is buy at current price of 170 if you have time frame of more than 1 year. The stock is a long term holding because telecom is closely linked to Indian consumer growth story. By Jan 2011, some brokerage reports will upgrade RCom, and we can see a rally. 13 Nov 2010: Reliance Comm – Results Press Release

RCom is looking to sell up to 26% stake to reduce debt. Its plan to sell its towers business to India’s GTL Infra, that could have reduced debt by 50%, fell apart in September. But no worries, it is evident that both RCom and Bharti are increasing focus on 3G/value-added offerings to improve margins, and their staying power is beyond doubt — both companies are going to roll out 3G wireless services to grow the high-margin mobile data business rather than depending on revenues from low-margin voice calls. The large number of youth in India will surely be good consumers of such higher-end services.

CMP is 170. Our 1 year target for RCom is 270, and 5 year target is 600+. And 200 can come rapidly, as soon as an update on tower sale or new equity infusion comes up.

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