Kumarmangalam Birla’s big idea finally made it to Dalal Street and as soon as the telecom player listed, it proved what huge appetite investors have for a quality telecom stock.
Idea opened at a premium of Rs 15 over its issue price, hit a day high of Rs 94 to finally close at about Rs 85.
“The markets clearly want to connect to Idea cellular’s growth story and at current valuations it is coming pretty cheap,” said Kumarmangalam Birla, Chairman, Idea Cellular.
Idea currently has a market cap of about five billion dollar for the 8.5 per cent share it has of the Indian cellular market.
Bharti on the other hand has a market cap six times that of Idea, while its market share is just three and half times more (30 per cent and $25 billion).
Market share
Analysts say that this makes idea great values buy and some brokerages say there could be an upside of about another rupees 20 on the stock.
No wonder that the investment bankers who fixed the issue price are so pleased with the stock’s performance.
“When something is kept in the table for a company I think it’s a great day. Idea has done well in spite of market volatility,” said Hemendra Kothari, Chariman, DSP Merill Lynch.
The much-awaited listing of Idea cellular was more or less on expected lines, though some segments of the market were expecting the listing to be a little higher.
Kumarmangalam Birla is confident of the growth of the business going forward and says Idea will soon be able to carve out reasonable market share in competitive circles like Mumbai and will buck the declining trend in average revenue per users (ARPUs).
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