Avantel Softech Ltd - 65.00 Rs

Incorporated in 1990, Avantel Softech Ltd (ASL) is a technology driven, ISO 9001 - 2000 accredited company which offers telecom products and software solutions. It has over the past few years developed expertise in telecom hardware, relevant embedded software and network management systems. In order to provide better solutions in communications and computing, ASL has made strategic alliance with renowned entities like Space Applications Centre, ISRO, L 3 Communications - Narda, USA and Vedang Radio Technology. Thru its govt recognized R&D division, ASL has developed a number of products for defence sector by ensuring compliance of stringent defence standards. Infact, it was the first Indian company to supply HDSL (High speed Digital Subscriber Line) and DSL equipments. Hence company primarily caters to the telecom and defence sector organizations. Broadly, its business model can be divided into following two segments:

A. TELECOM

ASL is actively involved in design and development of products based on high power broadband Wireless, Satellite communication and broadband access technologies. The design, development and integration of wireless and access products are carried out using its own proprietary software tools. Besides, company has a test and measuring facility for design, development and manufacture of wireless products (up to 20 GHz) and various access products supported by compilers and evaluation modules to test and integrate the software and hardware. This segment can be further subdivided into following two divisions:-

· Wireless : ASL designs and manufacturers repeaters, filters, splitters, tappers, combiners, couplers & amplifiers to enhance the capacity and coverage of wireless communication networks for use in GSM, CDMA and 3G networks. In short it offers products for indoor and outdoor environment to improve signal quality, coverage and capacity

· Satelite Communication: Ironically, ASL’s design and engineering team has developed a range of subsystem for satellite earth stations in collaboration with ISRO. It has developed customized solutions for INSAT based mobile satellite services with advance microwave, digital wireless communication and signal processing products for military and commercial market. Hence it offers mobile satellite services for messaging, tracking and all locations based services with appropriate network security. Using this same technology it provides specialized products like Ship borne terminal, handheld terminal, S-band receiver, UHF transmitter, burst demodulator etc which are one of its kind.

B. SOFTWARE

ASL provides services in the areas of ERP, web enabling of business processes as well as maintenance / enhancement of legacy systems, network management systems, remote monitoring & management, automation of test equipments and corporate portals. Its ERP software produc called “FunWork” covers all core and extended business critical functions of the enterprise such as marketing and sales, finance and accounts, manufacturing operations, customer support, personnel and administration. It also has expertise in electronic design services for product development, re-engineering, PCB design etc. Uner multimedia, ASL offers complete in-house creative and production capabilities-from concept development and script writing to programming, assembly, and testing.

Prsently, ASL is having development centers at Hyderabad, India and Boston, USA. Its client base comprises of telecom service providers like Airtel, BSNL, Ericsson, Vodafone, Idea, L3Communications, Nokia and Siemens and many other government organizations like BEL, Defence Labs, ECIL, Indian Army, Indian Navy, ISRO Centres etc. Notably, ASL could successfully develop transmitters and receivers to offer mobile satellite services for applications in Indian defence as well as other sectors. Secondly, its products for EW and COMINT applications have been well received by defence PSU'S such as BEL and ECIL. Company is also developing network manager to offer wide range of VSAT services with cost effective indigenous technology. It has also signed a Transfer of Technology (TOT) agreement with ISRO for supply of hubs and satellite interactive terminals for EduSat networks. Moreover it is developing various products for GPS based vehicle tracking system. To increase its presence company is in talks with some international players involved in the system integration business for strategic tie-ups and alliance. In future it plans to address requirements of railways, coast guards, fishing trawlers and transport vehicles. To conclude, company has huge potential for future growth. For nine months ending Dec 2007, its sales jumped up 135% to Rs 19 cr whereas Pat zoomed up to Rs 3.40 cr against 0.60 cr last fiscal. Historically, Q4 is the best quarter for the company and hence it may end FY08 with sales of Rs 35 cr and profit of Rs 5 cr. This works out to an EPS of Rs 10 on equity of Rs 5.15 cr. At a current EV of less than Rs 35 cr it’s a good bet and can give 50% return is a year’s time.

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