Concorde sees 27% growth potential in Romania's telco DIGI

Budapest-based brokerage company Concorde Securities has issued a BUY recommendation for the shares of the Romanian telecommunications operator Digi Communications (BVB: DIGI) and a 12-month price target of RON 84 (a significant upgrade from RON 47 previously) in the coming months, which implies a potential of 27.3% growth versus the current price (June 11).

Concorde estimated the target price based on the DCF (discounted cash flow) model.

It admits that based on a peer group comparison, DIGI is fairly valued and should trade at a share price of RON 66 based on the EV/EBITDA multiple and RON 44 based on the P/E basis.

However, Concorde analysts argue that DIGI is still far away from reaching a mature stage due to the immense growth the company is pursuing.

Concorde also writes in the report that DIGI maintained strong growth in Romania and Spain, which could anticipate another year of growth for the company. The recent sale of the fiber optic network in Spain will increase the company's liquidity and allow future investments in network growth.

DIGI has a market capitalisation of RON 6.6 billion (EUR 1.32 billion) after its shares rose by 90% y/y.

(Photo source: DIGI)