HDFC has maintained its buy rating on Tata Teleservices (Maharashtra) with a price target of Rs 63 in its May 13, 2008 research report. "Media reports have indicated that Tata Teleservices (TTSL) is placing 10% equity for its expansion in the CDMA and the soon-to-be-launched GSM services. Mexican billionaire Carlos Slim-controlled Telcel, UAE’s Emirates Telecommunications (Etisalat), Russian operator Altimo and buyout fund Apax Partners are in the fray, valuing the firm at USD 10 billion."
"DoT has granted GSM license to Tata Tele (including TTML) in 19 circles under the dual technology policy, but the launch of GSM services will depend on spectrum availability. TTML has shown a remarkable turnaround in financial and operational parameters, which we believe will reflect in its future performance, backed by expert top management. Subscriber acquisition rate for TTML at 38% CAGR for FY07-10E will be higher than the industry CAGR of 27% in Maharashtra and Mumbai circle, with a gain in market share from 12.26% to 15.65%, due to extensive micro coverage expansion and increased focus on data products. The data card business is on track with acquisition rates hovering around 13000-15000 per month. The stock is currently trading at 11.1x EV/EBIDTA on FY09E basis at a premium of 5% to Bharti and 7% discount to RCOM. We maintain our BUY rating with a price target of Rs 63, an upside of 78% from the CMP," HDFC securities' research report.
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