CLSA has a buy call on the shares of Idea Cellular with a target price of Rs 130. The shares were trading at Rs 96.25, up by more than 2.5% this morning. The firm’s target price implies an upside of more than 35% from the current market prices. Interestingly, the firm has maintained a buy on the shares, despite the company’s biggest ever quarterly loss.

CLSA says that the underlying metrics are encouraging, with ARPU (Average Revenue Per User) falling just 2% on quarter. ARPU fell to Rs 114 in the December quarter from Rs 157 in the year-ago period. This is lower than other players in the industry, Reliance Jio recorded an Arpu of Rs 154 while Bharti Airtel posted an Arpu of Rs123 in the December quarter. Further, CLSA observed that the merged entity will (Idea Vodafone combine) will offer a 5-38% revenue and EBITDA CAGRs over FY 19-21.

The revenue from operations stood at Rs 6,509.6 crore for the quarter ended 31 December 2017, almost 25% lower than Rs 8,662.7 crore in the corresponding quarter in the previous year. “The regulation imposed 57% sharp decline in IUC (Interconnect Usage Charges) settlement rates negatively impacted Idea’s Revenue and EBITDA for this quarter by Rs 8,200 million (Rs 820 crore) and Rs 2,300 million (Rs 230 crore) respectively,” the company said in a statement.

The statement said that the fall in domestic call connect charges that came into effect from October 2017 aggravated the industry’s financial stress. “Therefore, this quarter results are not comparable to the earlier periods,” the statement added. On the merger plans with Vodafone India, Idea said that combination is in the final leg of regulatory approval and expected to complete in the first half of 2018.