Another Multibagger Stock is coming from TATA Group.
Before stepping into our discussion of the hidden multibagger from the TATA Group, just we’ll let us know the details such as meaning and it’s applications in our life. so that we can understand this company and it’ll be helpful to build conviction about the stock, which can builds the confidence to hold the stock for long term, without any worries about short term corrections, the word we should know clearly is VSAT.
What is VSAT ?
VSAT – Very Small Aperture Terminal is a small sized earth station that is able to build the communication which enables us to trnsmit the data, voice and video signals over the satellite network. it will be very helpful to share the data securely and with a high speed. simply this technology connects us over the satellite. the following are the applications of VSAT.
1 High Speed internet access
2. Virtual private networks
3. Telemetry & Data collection
4. Point of Sales transactions
5. Distance Education
6. Private Line
7. Better Financials Management
Actually now a days to be honest we are facing lot of connectivity issues though we are in and using 4G technology and facing lot of lags. and the networks we are using are very poor in remote areas. it’s very difficult to reach villages and hill stations. lot of companies and public that includes government services like defence and health care are facing lot of challenges with the current networks. Still there is a big gap in covering the country with the fiber connectivity. Here VSAT comes into the place which could fulfill all above challenges with it’s advanced connectivity technology which connects over the satellite. Most importantly now a days satellite communication plays a key role in various segments such as in Flights, National borders and wars, Banking, Oil & Gas exploration and Mining etc. Here this company plays a key role in proving VSAT services to the country and the defense, Here’s the company name is TATA’s Nelco Ltd.
Company Overview :
Nelco Ltd is the part of the great TATA Group and that was established in 1940. Nelco Ltd is an India’s leading VSAT service provider. we have been already discussed about VSAT very clearly. this company has been focused on helping it’s enterprises and government to unlocks their potential by offering their solutions in the areas of VSAT connectivity, Satcom projects and integrated security & surveillance solutions. Theese solutions are backed by Nelco’s proven values and expertise in consulting, customisation, system integration, end-to-end management as well as robust infrastructure and processes.
Nelco Ltd holds the VSAT license, Internet Service Provider (ISP) license as well as the Inflight and maritime communication license issued by the Telecommunication department of India (DOT).
This company is the preferred partner for the government of India, Defense and Enterprise sectors, when it comes to security and surveillance in India, from keeping the borders safe and to alert the army by giving signals of movements through saltillite systems, this company plays a key role.
Strategic Partnerships :
This company has signed an agreement with Canadian Telesat, which is one of the global leader in providing VSAT solutions, valued at US $ 1.6 billion, also company has strategical partnerships with global leaders such as VT idirect, which is the global leader in providing IP – based satellite communications and Gilat satellite networks ltd (Israel – as this country is already providing satellite services to the India in himalayan borders), which is a leading provider of end-to-end satellite based communication solutions.
Business areas of the company :
Nelco Ltd specialises in the areas of security and surveillance for defence and civil applications, Banking, Oil exploration, Mining, tractions, electronics for locomotives, turnkey projects involving supervisory control and data acquisition system, VSAT based networks and network management systems. this company caters the some of core industries such as defence, railways, steel, cement, automobile, oil and gas and other services.
Clients of this company :
Ministry of Defence, Siemens, State electricity boards, SAIL, Indian railways, HPCL, TATA Motors, Philips Carbon black, Hindustan paper and chemicals, Jindal Steel and Power, TATA Iron and etc.
Growth Drivers :
The global VSAT market size is expected to reach US $ 14 billion, by 2026 with a CAGR of 8.8%. and there is lot of scope to grow for this industry, and Nelco Ltd is one of the few players in India that provides satellite services.
1. Increased demand by Maritime Industry
2. Increased demand for on the move VSAT solutions
3. Increased Importance for sea connectivity
4. Increased demand to build Private networks
5. Increased demand for Defense solutions
Financials :
Nelco Ltd is a micro cap company as it’s market cap is around Rs. 1813 cr. as this company has strong fundamentals and financials as this company was backed by cash rich TATA group. this company had 1.18 as debt to equity ratio. if you look at the company’s return ratios based on last fiver years average, the ROE is 29.7%, ROCE is 19.5% and the Net profit margin is 7.95%. if you look at share holding pattern, promoters are holding 50.1%, FIIs are holding 3.07%, DIIs are holding 0.05% and remaining shares were holding by the public. This stocks is currently trading at Rs. 793.
Profit & Loss Details :
Conclusion :
As there is huge demand is creating for the satellite solutions this company would get benefited from this demand. as every one looking for satellite internet connections this industry has a lot scope to grow. as far as we concern for long term we can add this stock in every considerable corrections and one more point i am going to reiterate that we are buying this stock based on the future considerations, so we should expect returns in future only and this picks is a non positional.
Disclaimer : The above all recommendations are from the individuals, working for ICICI Securities. please do your own research before investing else take an advice from your financial advisor.