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Buy Tulip Telecom on dips: H Shah
Harit Shah of Angel Broking is of the view that investors can buy Tulip Telecom on dips. It is the leader in the IP-VPN space, which is the preferred enterprise solution among most corporate. They have also spent a lot of money on ambitious expansion programme for a service that will help them to tap corporate in the metros.
Shah told CNBC-TV18, "The growth of Tulip Telecom is quite significant. With the expected pickup in the Indian and global economy we expect that demand for bandwidth and for telecom solutions and integrated services will increase. Tulip is the leader in the IP-VPN (Internet Protocol- Virtual Private Network) space, which is the preferred enterprise solution among most corporate. They have about 38% market share in that. They have also spent a lot of money on ambitious expansion programme for a service that will help them to tap corporate in the metros."
He further added, "Their last mile fibre based connectivity is a major programme for them and will increase their addressable market size about six times. So, basically we do expect the company to grow at a fairly robust pace. About 25-30% CAGR is something that is not unfathomable for the company. As far as our target is concerned, the stock has actually hit our target price. But if we look at valuations, we believe that it is not entirely expensive. It is trading at about 8.5 times FY11 EPS. So, going forward, we think that any dip in this stock is a good opportunity for investors to buy this stock."
Disclosure: Analyst doesn't hold the stocks but have recommended them to my clients.
