IDEA CELLULAR LTD.

Dear investors,

IDEA CELLULAR LTD. : BSE SCRIP CODE 532822

M/s Idea Cellular belongs to the Aditya Birla Group and offers GSM based Mobile services in several circles. The company has been granted licence to operate in all circles and will soon have a pan India presence.
The company is slowly and steadily increasing its subscriber base and the promoters do not need any introduction. Most investors who have an idea about wireless telephony business, will appreciate that in the initial years of establishment, the costs are very heavy. But now the cash registers of Idea Cellular have started ringing.

The business and profits come not only from voice calls but also various other sources. Of late SMS is generating lot of income for Cell Companies. Idea Cellular is sponsoring one programme IDEA STAR SINGER CONTEST in Asianet TV (Malayalam) which commands a huge TRP rating wherein TV viewers send SMS to select the winner. Very people know that SMS costs the company hardly anything but the profit is almost 100 percent.

The following very strong points speak in favour of Idea :

i) The company alongwith Bharti and Vodafone has formed a separate Company called Indus Towers, which will handle the tower related business. This is more or less like demerger.

ii) With introduction of 3G, the customers of Cell companies stand to benefit a lot from Internet based services etc. Like all companies, IDEA will also have a share in the pie.

iii) While TTML with a presence in only two circles is commanding a valuation of about 60 per share, IDEA’s share price at 138 or so is very reasonable.

FINANCIALS

The company has an equity capital of Rs.2635 Crores made up of 263 Crore shares of Rs.10.00 each. Promoter group holds 57.69 percent of shares, Mutual Funds, Insurance Companies, Banks and FIIs etc. hold 8.47 percent and Bodies corporate hold about 0.72 percent.

PERFORMANCE

The company’s performance is growing fairly steadily. The company clocked the FY 07 with a net profit of Rs.502 Crores. In the June quarter 2007, the company reported a profit of 193 Crores and in September Qtr. 220 Crores. In a conservative estimate, the company may end up the full year 2008 with a net profit of about 920 Crores which will be 80 percent growth over previous year.

Indian Telecome Sector is the fastest growing in the world. By 2011, the mobile subscriber base is expected to be almost double the present levels. IDEA is fully poised to take advantage of the growth story.

The major plus point seen is the value unlocking in the Tower business, which will add to the bottom line of the company. Further, in new areas the Company can start providing service without too much CAPEX.

Therefore, IDEA is an excellent buy at the current prices for conservative and safe investment. We expect a one year price target of 180 and two year price target of 220.

Accordingly, people with a conservative frame of mind and wanting to invest in sound companies can consider investing in Idea Cellular at the present levels of around 138.

Kindly note:

a) We advise only regarding fundamentally strong and performing companies. The companies may be mostly profit making and in a few cases, they may be turn around companies.
b) Please go through our fundamental analysis carefully, verify the facts and figures (if you need to) and only then invest.
c) We expect investors to have a time horizon of at least one year and more.
d) We do not advise for short term investing, which is risky.
e) Despite all these, we do not take any responsibility for your financial matters. Investment is solely your decision.



(AJAY SINGH RATHORE)
KASHIWALA