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Moneycontrol.com >> Messageboard >> Stocks >> Spanco >> Inflexion point
   You are here :     Moneycontrol     MMB    Stocks      Spanco                         Most active discussions of 2006 , 2007 & 2008
Inflexion point (7)   15-Jun-09 19:50Track this thread   Tracked by (0)  
Posted by:   RevengeOfTheGod on ( 15-Jun-09 19:50 )
Price : BSE: Rs 51.75 ( -4.08 % )
Spanco was one of the initial front runners of the great indian mid cap bull run. My initial purchase was at Rs sixty and i have seen it move all the way to Rs 300+

Coming to the present times, Spanco had hit rock bottom at Rs15. With the recent win of the BSNL order, i feel that the good times may be back at this counter. Spanco has never had a dearth of government orders. However things may be different this time around.

Promoters are taking a big stake at Rs40 and this is a very positive sign.

After a sharp upmove from Rs15 . Spanco is consolidating at these levels. Spanco has been confirmed as the lower bidder for the Rs7000+ BSNL order and now we are awaiting the official awarding of the order .

This is definitely a buy at these levels. Dont expect the company to start declaring turn around results from the next quarter. From my experience, the maximum profit is to be made in investing in companies that were doing great once upon a time and then fell upon hard times and then start doing well again.
Case in point - SEAMEC shipping. Look at the performance and the price history of the stock and you will understand what i mean.

Buy and hold for 2 years to get maximum benefits. This can turn out to be a 3-5 bagger.

From E.T
Spanco Telesystems was in the news for submitting the lowest bid for BSNL’s Rs 7,500-crore telecom infrastructure contract. The contract consists of providing telecom towers , power plants, generator sets and other infrastructure.

In the case of BSNL contracts, the lowest bidder typically gets 50% of the total contract work, while the remaining half is equally divided among the second and third lowest bidders. According to a source, Spanco is currently in the negotiation phase with BSNL and the final order size is likely to be Rs 3,750 crore. It is a build, own, operate, and transfer (BOOT) contract spanning over seven years.

BSNL has also floated a tender for IT related work with an expected size of Rs 6,000 crore. Spanco has tied up with applications developer Amdocs and IBM and has jointly bid for the tender . BSNL is likely to announce the lowest bidder for this project in a few weeks.

Spanco has grossed Rs 622 crore in revenue in the last four quarters. BSNL’s contract would help the topline increase at a rapid pace since the company expects to earn over Rs 1,000 crore in revenue in the first year of the contract with an operating margin of 14-15 %. This may provide some stability to its current margin, which has been fluctuating between 6% and 17%. Spanco has been aggressively looking for opportunities in the telecom and BPO space. However, it has yet to achieve financial stability. Its cash flow from operations is negative, indicating that the company is still in the financing mode and will take some more time to generate a cash flow from operations. It also has to improve its receivables collection. The debtor days or days for which sales are outstanding has increased to 169 days in FY08 from 122 days in the previous year.

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