Friday, May 14, 2021

Railtel Corporation of India Ltd (543265) - Participate in India's digitization drive

Railtel Corporation of India Ltd (543265)     closes   at 125.60  with  a  Loss  of   -1.70%   on    14-May-2021  with formation of  a  Red  Candle    on Daily  Price Chart.

About the Company : RailTel is a "Miniratna" PSE of Government of India focusing on providing broadband and VPN services. RailTel was formed in 2000, with the objective of creating nationwide broadband, telecom and multimedia network, to modernize train control operation and safety system of Indian Railways. RailTel's network passes through around 5,000 stations across the country, covering all major commercial centers

Sector Update : Positive

Strength :  Strong Orderbook Offers Revenue visibility mainly with Indian Railways

Financials : Railtel Corporation of India Ltd  has posted Net Sales / Revenue   of 1128.10r & Net Profit of 141.10 Cr in FY2020 and expected to post Net Sales / Revenue   of 1358.60 Cr & Net Profit  of 185.80 Cr in FY2021 and Net Sales / Revenue   of 1675.70 Cr & Net Profit of 263.70Cr in FY2022 ;Net Sales / Revenue   of 2063.70 Cr & Net Profit of 324.0 Cr in FY2023 and Net Sales / Revenue   of 2445.0Cr & Net Profit of 381.50 Cr in FY2024.Valuations  : The Company is now Trading at X 3.6  of its  valuations ( last 4Quaters earnings considered here) with ~260 % premium   and at X1.3 of its FY 2021, which is now almost  ~30%  premium   to its value and  X 0.94 of its FY 2022 earning with a Discount   of ~6% and X0.76 of its FY2023 earning with ~24%  discount to its valuations and ~35% Discount to its FY2024 earnings.

Margin of Safety (1Yr Bond Yield: Value>1 ) is now  0.40  which  makes is attractive after a ~60% fall in market price. The  Equity Value Per Share ( Enterprise Value Method ) is  119.700

Whats  best in It   : Railtel Corporation of India Ltd   is a Debt Free Company  and now available at EPS of 4.40 (FY2020), which will improve to 11.90 by FY2024,

If We factor its earnings/valuations, its Price arrives at 256 with consideration FY2024 earnings.

Disclaimer : We are / may going to take exposure shortly.

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