Reliance Communications price will fall relative to the country index

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Morgan Stanley in a Research Note said that the Price of Reliance Communications will fall within the next 30 days. Excerpts as follows,

The stock has traded up recently, making short term valuation much less compelling. RCOM is up 50% in absolute terms from its lows in the last month, outperforming the market by 11%. We believe this is largely due to its high beta of 1.3; and the company adding an estimated 11 million subs in F4Q09. The company should report results at end April 2009, which we believe could be disappointing due to lower ARPU’s as well as lower EBITDA margins from the new subscribers, higher interest costs and depreciation due to commissioning of GSM services.

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