Buy Spanco Tele; target of Rs 302: Emkay Research

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Buy Spanco Tele; target of Rs 302: Emkay Research

Broking house, Emkay Research is bullish on Spanco Telesystems and has recommended buy rating on the stock with a target of Rs 302.

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Spanco BSE | NSE 31/05/12 Are Mutual Funds betting on Spanco?

Broking house, Emkay Research is bullish on Spanco Telesystems and has recommended buy rating on the stock with a target of Rs 302.

Emkay Research report on Spanco Telesystems:

"Spanco Telesystems and Solutions Ltd announced robust set of numbers for Q3FY07, driven by strong telecom integration business. Revenues jumped by 231% to Rs1358mn (excluding Sparsh revenue for last year), EBIT jumped 158% to Rs184mn (like to like basis). PAT for the quarter stood at Rs100mn as compared to Rs47mn (not comparable). The company is one of the key beneficiaries of the rising telecom spending the country and increased necessity to strengthen the network infrastructure from the government point of view. Diversifying into new and high margin RfID space & expanding presence geographically (like Middle East) will not only have positive impact on the performance, but also proves the strategic move to strengthen the business for long term sustainable growth."

"We have revised our revenue numbers for FY07E and FY08E upwards by 25% and 15% respectively, while maintaining FY07E & FY08E PAT estimates, factoring lower margins. We believe that the company would continue to post robust performance and high RoIC of 24% for next 2-3 years leading to re-rating of the stock. The stock is currently trading at 13.1x FY08 FD EPS of Rs15.4 and 7.1x FY08E FD EPS of Rs27.7. The value of IRCTC contract also adds conservatively Rs25 per share to the value. We maintain BUY with revised price target of Rs302 (up from Rs217 earlier) using SOTP approach (10xFY08E EPS of Rs 27.7 and Rs 25 for IRCTC contract)."