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Idea Cellular: Interest Costs Hurt Profits - Views on News from Equitymaster
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Idea Cellular: Interest Costs Hurt Profits
Jul 4, 2016

Idea Cellular has declared the results for the fourth quarter and full year FY16. The company has reported a 12.6% YoY increase in revenues and a 38.9% YoY decline in net profits during the quarter. Here is our analysis of the results.

Performance summary
  • Consolidated sales grew by 12.6% YoY during 4QFY16. The good topline growth was due to an 13.9% YoY increase in VLR subscriber base as well as a 9% YoY growth in total minutes billed during the quarter. Total count of subscribers stood at around 181.9 m at the end of March 2016.
  • Operating margins improved to 38.1% in 4QFY16 from 36.4% seen during 4QFY15. The operating profit increased by 18% YoY as the company had clamped down on promo offers and advertising in the quarter.
  • Net profit decreased by 38.9% YoY during the quarter. The bottomline was affected due to lower other income as well as higher interest costs in the quarter. The net margins fell to 6.1% as compared to 11.2% during 4QFY15.

    Consolidated financial snapshot
    (Rs m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Sales 84,225 94,839 12.6% 315,709 359,810 14.0%
    Expenditure 53,580 58,678 9.5% 207,592 229,510 10.6%
    Operating profit (EBITDA) 30,645 36,160 18.0% 108,117 130,300 20.5%
    Operating profit margin (%) 36.4% 38.1% 34.2% 36.2%
    Other income 1,864 402 -78.4% 4,697 2,271 -51.6%
    Finance charges 2,917 8,081 177.1% 10,452 18,816 80.0%
    Depreciation 14,877 19,737 32.7% 53,036 66,508 25.4%
    Profit before tax 14,715 8,745 -40.6% 49,325 47,247 -4.2%
    Tax 5,298 2,989 -43.6% 17,396 16,447 -5.5%
    Net profit 9,418 5,756 -38.9% 31,929 30,799 -3.5%
    Net profit margin (%) 11.2% 6.1% 10.1% 8.6%
    No. of shares 3,600.5
    Diluted Earnings per share (Rs)* 8.6
    P/E ratio (x)* 12.4

    On a trailing 12 months basis)

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