Deutsche Bank cuts Idea Cellular to 'hold'

Deustche Bank downgraded Idea Cellular to "hold" from "buy", citing regulatory risks and valuations after the stock outperformed the BSE Sensex over the past six months.

The bank says Idea's recent outperformance already discounts hopes about execution, margin expansion and positive cash flows that were the main premise for its previous "buy" rating.

Deutsche also warns costs associated with the government's move to reset reserve prices and terms for license renewals could "significantly" exceed Idea's free cash flow over the next three years.

Idea shares gained 36.3 per cent in 2013, as of Friday's close, compared with a 0.2 per cent fall in the Sensex over the same period.

At 12.17 p.m., Idea Cellular shares are up 1.6 per cent.

Copyright: Thomson Reuters 2013