Valiant Communications Limited

Transcription

1 Valiant Communications Limited Date: 5 th January, 216 Stock Performance Details Shareholding Details September 215 Current Price : ` 126.9^ Face Value : ` 1 per share 52 wk High / Low : ` / 19.5 Total Traded Volumes: 8,565 shares^ Market Cap : ` 91.6 crore^ Sector : Telecom Equipment EPS (H1 FY16) : `.74 per share Equity Share Capital : ` 7.2 crore P/E (TTM) : (x)^ P/BV (TTM) : 3.24 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : VALIANT BSE Scrip Code : ^ As on 1 st January, 216 Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 3,56, Total Institutional Holdings (FIIs & DIIs) 3,9.5 Public Holdings 41,63, Total 72,23,46 1. Background Valiant Communications Ltd. manufactures telecom transmission and communication equipment and solutions with a number of installations across 1 countries. The products include GPS Primary reference Clock Synchronization receivers, E1 PDH Multiplexers, Digital Access Cross Connect switches, Groomers Hi-z Monitoring, APS - Automatic Protection Switches, Echo Cancellers, IP Multiplexers, E1, T1, E3, DS3, Ethernet Converters, Fibre Optic Transmission Solutions and Digital Access Cross Connect switches. The Company has established two subsidiaries which are Valiant Communications (UK) Ltd., United Kingdom and Valiant Infrastructure Ltd., India to explore the emerging opportunities in world telecom market and infrastructure development. Valiant Communications provides a powerful blend of "quality and economics". The Company is an ISO 91:28, ISO 141:24 and ISO 12:24 certified equipment manufacturer. The Company has been recently focusing on delivering products and solutions applications for Railways / Metro networks, Power Utilities, other utilities including Oil and Gas networks, Airport and Defence Communications Networks. The Company received a contract from Power Grid Corporation India Ltd. for the supply, installation and commissioning of digital tele-protection coupler (DTPC)/ digital protection signaling equipment for supply in India. An Initiative of the BSE Investors Protection Fund1

2 Financial Snapshot Particulars Standalone(` Million) Income Statement H1 FY16 H1 FY15 Income from Operations Y-o-Y Growth (%) EBITDA 1.3 (4.7) Y-o-Y Growth (%) (2.5) EBITDA Margin (%) 13.4 (1.2) Net Profit 5.4 (3.2) Y-o-Y Growth (%) (33.3) NPM (%) 7. (6.9) Balance Sheet Fixed Assets Cash and Bank Balances Inventories Net Working Capital Net Worth Balance Sheet Ratios ROCE (%) 6..6 RONW (%) 1.9 (1.1) Source:Capitaline From the Research Desk of LKW s Gurukshetra During H1 FY16,the Company s Income from Operations including export sales jumped by 65.8% y-o-y to Rs million from Rs million reported in H1 FY15. Material Cost increased to Rs million in H1 FY16 from Rs. 26 million reported in H1 FY15. Employee Benefit Expenses increased from Rs million reported in H1 FY15 to Rs million in H1 FY16. Other Expenses decreased from Rs million in H1 FY15 to Rs million in H1 FY16. The Company reported an Operating Profit of Rs. 1.3 million in H1 FY16 as compared to an Operating Loss of Rs. 4.7 million in H1 FY15 on account of higher Sales reported for the period under review. In line with the performance at the EBIDTA level, the Company reported a Net profit of Rs. 5.4 million in H1 FY16 as compared to a Net Loss of Rs. 3.2 million in H1 FY15. EBIDTA and PAT Margins for H1 FY16 stood at 13.4% and 7% respectively. Inventories decreased by 25.9% on a y-o-y basis from Rs. 1.9 million in H1 FY15 to Rs million in H1 FY16. Debtors increased from Rs million reported in H1 FY15 to Rs million in H1 FY16. The Company has recently received a Letter of Intent to supply its products named E1 PDH Multiplexer, Digital Tele-Protection and GNSS (Satellite) Time Synchronizationequipment to the projects of Maharashtra State Electricity Transmission Company Ltd., to supply and install its products named E1 PDH Multiplexer and Digital Tele-Protection equipment to Tamil Nadu Transmission Corp. Ltd. and Bihar State Power Transmission Company. The gross value of the Letter of Intent is more than Rs. 2 million. An Initiative of the BSE Investors Protection Fund2

3 The Company informed the Exchange that its subsidiary Company; Valiant Communications (UK) Ltd. entered into an agreement with Herbing Comunicatii SRL, Romania, under which Herbing shall offer communication equipment of the Company to different utility sectors including power utilities in Romania. Under this agreement, the initial commercial deployments have also been commenced in major power utilities of Romania named Transelectria SA and Electrica Transilvania SA. Also, the Company signed a Memorandum of Understanding (MOU) with Webfil Limited (Webfil), a subsidiary of Andrew Yule & Co. Ltd. and an undertaking of Govt. of West Bengal, under which Webfil shall offer and market the communication equipment of the Company to different Indian utility sectors on a non-exclusive basis. Performance on the Bourses % Stock Performance Valiant Communications as on 1st January, 216 BSE Small Cap Peer Comparison Valiant Communications Limited manufactures telecom transmission and communication equipment and solutions. The growth story and the potential of the telecom equipment sectorhave served to attract new players in the industry,due to which the intensity of competition has been increasing.the table mentioned below gives a snapshot of the Company s performance to those of its peers which operate in a similar business segment in the listed space for H1 FY16. (` In millions) Particulars Valiant Communications Ltd. Shyam Telecom Income from Operations ,388.4 EBIDTA 1.3 (59.7) Net Profit 5.4 (6.6) EBIDTA Margins (%) 13.4 (4.3) PAT Margins (%) 7. (4.4) Book Value Per Share P/E (x) 46.42^.^ P/BV (x) 1.17^ 2.36^ RONW (%) 1.9 (74.9) Source: Capitaline ; ^ On a Standalone Basis as on September 215 (TTM Basis) An Initiative of the BSE Investors Protection Fund3

4 About the Industry Management Outlook The Indian Telecommunications industry is one of the fastest growing in the world. From the early days of LAN and WAN through wireless networking and the World Wide Web to 3G and 4G, Cloud Computing and Mobile Internet, the sector continues to grow at a steady pace. Internet connectivity and high speed data communication is becoming an essential part of modern life. The demand for Telecom equipments is increasing which is fuelled by smart phones and notebooks coupled with increasing usage of videos and data services. The telecom equipment business is becoming more and more user-friendly and software intensive. Driven by a strong demand for data services on handheld devices, the total mobile services market revenue in India is expected to touch USD $37 billion by 217, registering a compounded annual growth rate of 5.2% between 214 and 217. Also, the broadband services user base in India is expected to grow to 25 million connections by 217.The Industry has attracted FDI worth USD $17,58 million during the period April 2 to March 215, according to data released by Department of Industrial Policy and Promotion (DIPP). As per Government data, India s imports of telecom equipment in the last fiscal stood at Rs. 69,516 crore as against exports of Rs. 2,475 crore, resulting in a net foreign exchange outflow of Rs. 49,41 crore. Despite India s Telecom sector growing at a healthy pace, the domestic production of telecom equipment is moderate. The Department of trade has made some recommendations to help boost the telecom equipment manufacturing within the country. Extension of investment linked incentives to the capital investment made for manufacturing of telecom equipments including their parts and accessories and capital investment made by telecom infrastructure service companies for setting up new telecom towers or replacement of equipments in existing towers are some of them. With the increasing subscriber base there has been an increase in the investments and developments in the sector. The Government plans to roll out free high speed Wi-Fi in 2,5 cities and towns across the country over the next three years. The International telecommunications landscape continues to offer growth opportunities, despite the weak recovery in the world economy. The accelerated growth in the telecommunications applications and changes in technology offers growth potential to the Company. Earlier, the Company was mainly focused on the export market; however, since the Indian economy is becoming more vibrant, the Company is witnessing a pickup in demand in communications equipment. This pickup is visible across the Indian utility sectors such as Power, Airport Communications, Defence, Oil and Gas and Railways. The Company continues to develop technological building blocks that have resulted in advanced technology products. This enables it to satisfy and keep up with the changing market requirements with flexibility. The Company is also trying to get approval of its Satellite based Network Synchronization range of products from various telecom companies because of its critical application in reduction of call-drop and improvement in call quality. In the current financial year, various products of the Company have been approved by some of the major corporations like Power Grid Corporation of India Ltd., L&T, IRCON, Siemens and various other state electricity Companies. This will help the Company gain a competitive advantage over some large Multinational Companies in the sector. It also focuses on expanding its global marketing network and building a large distributor base, through which it can sell its product worldwide. However, the telecommunication sector, being a high technology oriented business is prone to rapid technology obsolescence. To cope up with the advancement in the technology, the Company will have to innovate and evolve rapidly and offer competitively priced products in the market. An Initiative of the BSE Investors Protection Fund4

5 Financial Graphs 1 8 Net Income from Operations ` in Million H1 FY15 H1 FY16 ` in Million EBIDTA & EBIDTA Margins H1 FY15 H1 FY % EBIDTA EBIDTA Margins PAT & PAT Margins ` in Million H1 FY H1 FY % PAT PAT Margins An Initiative of the BSE Investors Protection Fund5

6 Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements based on available data, and LKW s Gurukshetra shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW) commenced business in 1991 and is currently engaged in providing CAPITAL MARKET RESEARCH, INVESTMENT ADVISORY and STRATEGY services. GURUKSHETRA is the Research and Training arm of LKW. LKW Investment Advisers is the SEBI registered Investment Advisory arm of LKW. 5 Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office:B Wing, 55-56, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai enquiry@lotusknowlwealth.com Tel: Website: An Initiative of the BSE Investors Protection Fund6