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BW Businessworld

MS Downgrades RComm, Idea Cellular

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Morgan Stanley has downgraded its view on India's telecom sector to "in-line" from "attractive", citing increased regulatory risks tied to the spectrum auction, and "relatively weaker" 3G outlook.

The brokerage has cut its rating on Reliance Communications to "underweight" from "equalweight", and slashed its target price to 51 rupees from 109 rupees, citing a weaker balance sheet and saying the company faced the highest regulatory risk.

Morgan Stanley has also cut Idea Cellular to "equalweight" from "overweight", while reducing its target price to 87 rupees from 134 rupees, citing its smaller balance sheet and a 32 per cent outperformance in the last twelve months.

Bharti Airtel remains the only "overweight"-rated stock in Morgan Stanley's telecoms coverage, with a target price of 366 rupees, down from 488 rupees earlier.

Shares in Bharti Airtel were down 0.5 per cent to 301 rupees, Idea Cellular down 0.9 per cent to 78.50 rupees, while Reliance Communications fell 1.3 per cent to 66.55 rupees.