Shares in Idea Cellular gained 1.5 per cent in early trade

Idea, a part of the Aditya Birla conglomerate, said consolidated net profit rose to Rs. 240 crore from Rs. 106 crore a year earlier.

Idea, in which Malaysia's Axiata owns about a fifth, ranks fourth by subscribers. It had about 116 million mobile customers as of August.

Morgan Stanley said a 200 basis point fall in quarter-on-quarter sales and marketing costs as a percentage of revenue has improved EBITDA margins by around 70 basis points to 26.8 per cent. However, the investment bank says results were largely weaker than expected on the back of falling sequential revenue and weak traffic that weighed on EBITDA, which is a key measure of profitability.

Here's what other brokerages say on Idea Cellular earnings.

1) CLSA has a "sell" rating on the stock with a target of Rs. 67. “Revenue is below estimates, network traffic has gone down 4 per cent Q-o-Q... We maintain Idea’s regulatory risks are high and will stretch the balance sheet,” CLSA said.

2) Deutsche Bank has a "hold" rating on the stock with a target of Rs. 85. “Good Q2 results but regulatory overhang remains... Free cash flow would not cover potential regulatory costs,” the investment bank said.

3) Barclays has an "equal weight" rating on the stock with a target of Rs. 100. “Idea's results surprised positively with sharp optimization of marketing spend which led to the EBITDA margin expanding by 69 basis points,” Barclays said in a note.

Shares in Idea Cellular traded 1.3 per cent higher at Rs. 82.30 on the BSE, outperforming the broader Sensex, which traded 0.07 per cent lower at 10 a.m.