Citigroup has maintained its ‘hold’ rating on Idea Cellular.

Target price: Rs 56 

Citigroup has maintained its ‘hold’ rating on Idea Cellular while cutting its price target to Rs 56 from Rs 70 in line with an earnings down-grade for financial years 2009-11 by 1-3%. 

“Relatively weaker balance sheet compared to its larger peers reduces the funding flexibility in a tougher macro environment, thus constraining the valuation multiples,” the investment bank said in a report. 

“Estimated net debt of Rs 4,900 crore as of end-FY09 (Rs 3,200 crore as of September, ‘08) is under control though net debt/EBITDA (earnings before interest taxation depreciation and amortisation) will be 2.3-2.4 times in FY10-11E. While this will moderate Idea’s bidding intensity, on the flip side, its balance sheet is most vulnerable to 3G bidding risk,” Citi added. - ET