Recommendation: Sell
CMP: Rs 137.50
- Mahanagar Telephone Nigam Limited (MTNL) was set up in 1986 by the Indian government to upgrade the quality of telecom services and expand the telecom network. However, the recent developments in the telecom sector have not boded well with the company.
- In Q3FY06, the company registered a mere 2.70 per cent year-on-year growth in sales. This was due to a limited increase in the customer base coupled with falling ARPUs (Average Revenue Per User).
- Lack of day-to-day operational freedom, overstaffing, the restriction on expanding geographically beyond Mumbai and Delhi and insufficient marketing and customer-care focus are expected to further impact the company’s performance in the coming future.
Nucleus Software Limited
Recommendation: Buy
CMP: Rs 357.50
TARGET PRICE: Rs 457
- Incorporated in 1989, Nucleus Software Limited’s business broadly consists of software development and support services for corporate business entities.
- Its flagship products like ‘FinnOne’ and ‘Cash@will’ are very well received by its clients. In the first nine months of FY06, the company’s revenues and profits have grown by 47 per cent and 114 per cent respectively on a year-on-year basis.
- Margins are expected to remain subdued in the next few quarters since the company is adding up significantly to the employee numbers. The stock is currently trading at 12.5 x its FY07E EPS of Rs 29.
AIA Engineering Limited
Recommendation: Buy
CMP: Rs 601.55
Target Price: Rs 700
- AIA Engineering Limited is an ISO 9000 certified company, specialising in design, development, manufacture, installation and servicing of high chromium wear, corrosion and heat resistant parts used in cement, mining and thermal power generation industries.
- In Q3FY06 the company’s performance was better than expected. On a consolidated basis, the company registered sales of Rs 94.5 crore (up by 48 per cent) and net profit of Rs 13.6 crore (up by 115 per cent) on a year-onyear basis.
