Surana Telecom - Rs.72.00

Originally incorporated as Surana Petroproducts Pvt Ltd in August 1989, Surana Telecom Ltd. (STL) became a public limited company in July 1993. Promoted by G M Surana, G P Surana, Narendra Surana and Devendra Surana. The company is engaged in the manufacture of heat-shrinkable cable jointing kits, Jelly Filled Telecommunication Cables (JFTC), wire connectors, end caps, modular connectors and HDPE pipes catering to the telecommunication sector. STL is also one of the foremost producers of Optic Fiber Cable (OFC) in the country for which it has technical collaboration with Rosendahl, a 100 per cent subsidiary of Alcatel.

Due to the difficult times faced by the cable industry, STL recently diversified into the high growth business of assembling of CDMA (code division multiple access) based telecom terminals. It ventured into this lucrative market of assembling and trading of CDMA handsets with an understanding with LG Electronics Inc & Huawei Technologies Co. Ltd. to supply the CDMA and Fixed Wireless Terminals to BSNL, MTNL, Reliance Infocomm and Tata Teleservices. It is now looking at into Internet Protocol TAX (Telephone Exchange) that is equipment that supports the Internet and converts the existing networks to support IP. The company has also applied for a Qualcomm product license and plans to manufacture some of the CDMA products. Of late, the company has moved into the Handheld segment also and offers CDMA colour display handheld terminals to MTNL. It is also setting up facilities to manufacture switch mode power supply based battery chargers which can increase the talk time drastically The Company is also entering into various products in the Broad Band Digital Loop Carrier (DLC) and shall be in the front end technology partner in the various requirements of BSNL & MTNL. Moreover, its JFTC & OFC division will continue to perform well given the plans for expansion of broadband connectivity especially by BSNL only a few days back, it bagged a Rs.30 cr. order for it cable division.

It turned around in both the quarters of FY05 due to strategic shift towards wireless telecom products from cable manufacturing. For the six months ending Sept 2004 its Net sales jumped 8 times to Rs.70 cr. and NP quadrupled to Rs.5.30 cr. compared to last year. This works out to an half yearly EPS of Rs.5 on its current equity of Rs.11.30 cr. taking into account the management’s aggressive style and growth prospects, STL could close FY05 with turnover of Rs.160 cr. and NP of Rs.14 cr. registering an annualised EPS of Rs.12 Hence it is trading cheap at 6 PE only. Investors are advised to buy into the stock and expecting 50 per cent return in 8-12 months.