Financial Daily from THE HINDU group of publications
Saturday, Jul 09, 2005
Info-Tech - Stocks
Hinduja TMT finding favour among investors
Kolkata , July 8
ARE investors finding a new comfort level in revaluing the Hinduja TMT stock? The stock price trends seem to suggest that it has been trying to breach the resistance in the range between Rs 300 and Rs 350.
Today, it finished at Rs 312.25, with a gain of 2.26 per cent. The stock had hit its 52-week high at Rs 358.90 on February 7 last. A month ago, the stock was hovering around Rs 335.
According to some analysts, a drop of 1.2 per cent in topline and 7.24 per cent in bottomline in 2004-05 had dampened the sentiment for the stock. However, some recent announcements by the management and a few developments that are expected to occur soon have attracted market attention.
"Though the company has reported setting up of a new BPO centre in Mauritius and additional clients as also recruitments, the current value driver for the stock could be its media and telecom businesses," a fund manager said.
While the media business is likely to benefit from a favourable verdict on the CAS issue, the proposed de-merger of this business and turning it into a listed entity could unlock fresh value, analysts felt.
"Its cable network has a very strong customer base in a number of cities including Mumbai. According to an estimate, the potential value of this customer base for wide ranging cable related services (television signal transmission, data transfer, broad band, net telephony etc) could be between $1.5-2 billion as a going concern," a media analyst with an institutional brokerage observed. Moreover, its own channel CVO also has a strong viewership.
According to Dalal Street calculation, its investment in Hutchison Max Telecom would be worth around Rs 180 per share (the expected total consideration being between Rs 700 crore and Rs 800 crore). This has been proposed for disinvestment to a strategic investor.
The CAS issue is coming up for hearing in the Delhi High Court on July 11. The media industry is expecting that the vexed issue would finally be resolved through intervention of the Court.
This would pave way for a dramatic increase in earnings for MSOs like Hinduja TMT.
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