Vind­hya Telelinks Ltd

Money Times - - Stock Watch - By Amit Ku­mar Gupta

(BSE Code: 517015) (CMP: Rs.879.30) (FV: Rs.10) (TGT: Rs.1000+)

Vind­hya Telelinks Ltd (VTL) op­er­ates in two seg­ments - Ca­bles and en­gi­neer­ing, pro­cure­ment and con­struc­tion (EPC). The ‘Ca­bles’ seg­ment man­u­fac­tures and mar­kets telecom­mu­ni­ca­tion ca­bles, other types of wires and ca­bles and FRP rods/glass rov­ings, among oth­ers. The ‘EPC’ seg­ment un­der­takes and executes con­tracts and pro­vides ser­vices with or with­out ma­te­ri­als. Its en­ter­prise so­lu­tions in­clude struc­tured ca­bles and tele­com fi­bre ac­ces­sories. Its prod­ucts in­clude op­ti­cal fi­bre ca­bles (OFCs) such as multi-tube rib­bon type cable and drop cable; cop­per tele­com ca­bles such as sig­nalling ca­bles, aerial bunched cable and jumper wire; spe­cial­ity ca­bles such as elec­tro­plated tinned cop­per wire; and op­ti­cal fi­bre rib­bon.

Dig­i­ti­za­tion: The ‘Dig­i­tal In­dia’ pro­gramme, which will be pow­ered by Na­tional Op­ti­cal Fi­bre Net­work (NOFN) project as the tri­umph of Dig­i­tal In­dia rests on the ro­bust­ness of the tele­com sec­tor. NOFN, which is now rechris­tened as ‘Bharat Net’, aims to cover the coun­try­side through a broad­band net­work to con­nect 2,50,000 gram pan­chay­ats with a band­width of 100 mbps (megabits per sec­ond) by lay­ing more than 1 mil­lion kms of OFC. Im­ple­men­ta­tion of the NOFN project is gain­ing mo­men­tum lead­ing to higher vol­umes of OFC con­sump­tion.

Roll Out 4G Tele­com Ser­vices: Pri­vate sec­tor tele­com ser­vice providers are up­grad­ing their net­works to of­fer high­speed 4G tele­com ser­vices. The ac­qui­si­tion of ad­di­tional spec­trum will drive net­work ex­pan­sion by in­cum­bent op­er­a­tors as well as in­vest­ments in tele­com in­fras­truc­ture. Fur­ther, high-speed data net­works will drive back­haul fiberi­sa­tion. The gov­ern­ment’s ‘Smart Ci­ties’ project will be the key en­abler for in­vest­ments in broad­band in­fras­truc­ture. VTL con­tin­ues to fo­cus on its strate­gic ini­tia­tive of re­align­ing its prod­uct port­fo­lio to­wards the emerg­ing de­mand of OFCs from var­i­ous new ap­pli­ca­tions in­clud­ing for the Fi­bre-To-The-Home (FTTH) roll out by lead­ing 3G/4G ser­vice providers and fiberi­sa­tion of tele­com tow­ers. It has trans­formed it­self into more of an EPC player than just a cable man­u­fac­turer. Its EPC di­vi­sion cur­rently con­cen­trates on three pri­mary busi­ness ver­ti­cals - Tele­com, Power and Sew­er­age Projects, which con­trib­ute ~60% of rev­enue.

On other fi­nan­cial pa­ram­e­ters, the Com­pany’s top-line and bot­tom-line are grow­ing at ~40% and ~50% re­spec­tively; RoE is above 20%; D/E ra­tio is be­low 0.5x. Also, the Com­pany is gen­er­at­ing healthy op­er­at­ing cash flows.

Tech­ni­cal Out­look: The Vind­hya Telelinks Ltd stock looks very good on the daily chart for medium-term in­vest­ment. It has bro­ken out of its as­cend­ing tri­an­gle pat­tern and trades above all im­por­tant DMA lev­els on the daily chart. Start ac­cu­mu­lat­ing at this level of Rs.879.30 and on dips to Rs.830 for medium-to-long-term in­vest­ment and a pos­si­ble price tar­get of Rs.1000+ in the next 6 months.

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