COMPANY OVERVIEW:
Reliance Communication formerly known as Reliance Infocomm is the part of Anil Dhirubhai Ambani Group. It is India’s leading integrated telecommunication company with over 60 million customers.
The business of the company encompasses a complete range of telecom services covering mobile and fixed line telephony. It includes broadband, national and international long distance services and data services along with an exhaustive range of value added services and application.

VISION:
“We will leverage our strengths to execute complex global-scale projects to facilitate leading-edge information and communication services affordable to all individual consumers and businesses in India.
We will offer unparalleled value to create customer delight and enhance business productivity.
We will also generate value for our capabilities beyond Indian borders and enable millions of India's knowledge workers to deliver their services globally.”

GSM LAUNCH IN 14 CIRCLES: RCOM announced that it will launch its GSM services in 14 circles. RCOM GSM network will initially cover 11000 towns and 300000 villages. RCOM plans to increase its coverage to 24000 towns and 600000 villages by the mid of 2009. RCOM capex for Q2FY2009 was Rs47.7bn capex/sales of 85%. Capex is expected to further increase.

KEY CONCERN:
Liability on outstanding FCCB increased by Rs5.4bn due to the depreciation of rupee. Company recently bought some FCCB from the market but that is very negligible compared to the total amount.
Capital expenditure is very high as compared to realization.
Likely tariff pressure due to new rollouts by competitors and implementation of Mobile Number Portability.
Pushback in rollout plans and pressure on operating profit margin post rollout.
Aggressive expansion.
Increasing finance cost.
Pressure on margin.

	NO.OF SHARES	% OF TOTAL
PROMOTER	1364811060	66.12%
INSTITUTION	358673366	17.38%
GENERAL PUBLIC	340542455	16.50%
GRAND TOTAL	2064026881	100%

	31/03/07	% CHG	31/03/08
TOTAL INCOME	11761.91	14.15%	13426.65
EXPENDITURE	-7248.66		-8533.73
OPERATING INCOME	4513.25	8.41%	4892.92
DEPRECIATION	-1836.12		-1843.66
PBIT	2677.13		3049.26
INTEREST	-232.38		-445.17
PBT	2444.75		2604.09
TAX	-12		-17.64
PAT	2432.75	6.31%	2586.45

HIGHLIGHTS:
TOTAL INCOME GREW BY 14.15%
OPERATING PROFIT GREW BY 8.41%
NET PROFIT GREW BY 6.31%

		31/03/07	31/03/08
	EPS	11.7808717	12.52518
	OPM	38.371744	36.44185
	NPM	20.6832904	19.26355
INTEREST COVERAGE		11.5194923	6.849191

HIGHLIGHTS:
EPS INCREASED BY 6.31%
OPM DECREASED BY 193 basis points.
NPM DECREASED BY 142 basis points.
INTEREST COVERAGE CAME DOWN FROM 11.51 TO 6.84.

	31/12/07		31/12/08
TOTAL INCOME	3410.82	-0.35%	3398.73
EXPENDITURE	-2343.78		-2466.74
OPERATING INCOME	1067.04	-12.60%	931.99
DEPRECIATION	-492.53		-617.81
PBIT	574.51		314.18
INTERSET	-135.73		-569.91
PBT	438.78		-255.73
TAX	-2.3		-3.9
EXTRA ORD INCOME	0		656.67
PAT	436.48	-9.03%	397.04

HIGHLIGHTS:
TOTAL INCOME DECREASED MARGINALLY BY 35 basis points.
OPERATING PROFIT DECREASED BY 12.6%.
NET PROFIT DECREASED BY 9.03%.

		31/12/07	31/12/08
	EPS	2.113705	1.922712
	OPM	31.28397	27.42171
	NPM	12.79692	11.68201
INTEREST COVERAGE		4.23056	0.55128

HIGHLIGHTS:
EPS CAME DOWN BY 9.03%.
OPM CAME DOWN FROM 31.28% TO 27.42
NPM CAME DOWN FROM 12.79% TO 11.68%
INTEREST COVERAGE CAME DOWN DRASTICALLY FROM 4.32 TO 0.55.

VALUATION:
We expect the company EPS to grow at rate of 7% in FY2009 and FY2010. At CMP it is trading at 13.6X to past year earning. The valuation still looks very rich. PE to Growth ratio stands at 1.94.Even if we give the PE to Growth of 1.2 which is on higher side,the fair market value come at Rs96.

CONCLUSION:
We maintain Avoid or Sell rating on the counter. Investor should stay away from the counter.