RCom gains on bargain hunting

Reliance Communications gained 1.56% to Rs 48.95 at 14:25 IST on BSE on bargain hunting after the stock dropped 5.58% in prior two trading sessions.

Meanwhile, the BSE Sensex was up 43.64 points, or 0.15%, to 28,642.67.

On BSE, so far 10.12 lakh shares were traded in the counter, compared with an average volume of 28.71 lakh shares in the past one quarter. The stock hit a high of Rs 49.20 and a low of Rs 48.40 so far during the day. The stock hit a 52-week high of Rs 91.80 on 1 January 2016. The stock hit a record low of Rs 45.55 on 24 June 2016. The stock had underperformed the market over the past one month till 16 September 2016, rising 0.52% compared with Sensex's 1.9% rise. The scrip had also underperformed the market in past one quarter, gaining 2.99% as against Sensex's 7.82% rise.

The large-cap company has equity capital of Rs 1244.49 crore. Face value per share is Rs 5.

From a close of Rs 51.05 on 14 September 2016, the stock dropped 5.58% in two sessions to settle at Rs 48.20 on 16 September 2016. Reliance Communications (RCom) announced after market hours on 14 September 2016 that the company and Maxis Communications Berhad (MCB), promoters of Aircel, a leading pan-India mobile operator signed definitive documents for the merger of their Indian wireless businesses-the largest-ever consolidation in the Indian telecom sector. The stock had dropped 2.45% to Rs 49.80 on 15 September 2016 following the announcement of merger. The RCom-Aircel combination will create a strong operator ranked amongst India's top 4 telecom companies by customer base and revenues, also ranking amongst the top 3 operators by revenues in 12 important circles.

The merged company will be one of India's largest private sector companies, with an asset base of over Rs 65000 crore ($9.7 billion) and net worth of Rs 35000 crore ($5.2 billion). The combined entity will enjoy substantial benefits of scale driving significant revenue growth, and capex and opex synergies with an NPV of Rs 20000 crore ($3 billion).

RCom and MCB will each hold a 50% stake in the merged entity with equal representation on the board of directors and all committees. The company will be managed by an independent professional team under the supervision of the board. RCom's overall debt will reduce by Rs 20000 crore ($3 billion) or over 40% of its total debt, and Aircel's debt will reduce by Rs 4000 crore ($600 million), upon completion of the transaction in 2017.

RCom's consolidated net profit rose 5.9% to Rs 54 crore on 3.8% decline in net sales to Rs 5247 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours on 14 September 2016.

RCom is an integrated telecommunications service provider.

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