Spanco Telesystem and Solutions Ltd - 200.00 Rs
Established in 1995 by Mr. Kapil Puri and Mr. Rajesh Chhabria primarily to manufacture and supply of EPABX, Spanco Telesystems and Solutions Ltd (STSL) is today one of the leading telecom systems integration and IT services company in India. From providing telecom integration services to MNC’s, PSU’s and Defense sector, STSL has evolved to extend its expertise into the dynamic space of Business Process Outsourcing (BPO) and Radio-frequency identification (RFID). In short company is operating in following four business segments:
I. Turnkey Solutions
STSL’s core competency lies in offering telecom systems integration which includes implementation of multi-location, multi-services converged networks for carrying diverse multimedia traffic (voice, data & video) based on latest technologies like ATM, MPLS, Frame Relay, TCP/IP etc. In other words company undertakes the turnkey responsibility of supplying the requisite products and services under the PDIM (Plan Design Implement-Manage) model, thereby taking care of the networking and networking infrastructure requirements of the customer. It also offer network engineering services and acts as an ideal intermediary between Network Equipment Providers and Operators for the roll out of GSM/CDMA infrastructure across the length and breadth of the country. Notably, STSL has alliances with leading global companies like Alcatel, Nortel, Key Mile, Apropos, DMC Stratex Networks which help in bidding for large Indian contracts.
II. Business Process Outsourcing (BPO)
After hiving off its domestic BPO activities ‘Sparsh’ to Intelenet, SSTL currently manages ‘Respondez’ state-of-the-art international call centre in Mumbai serving clients in the US and UK. It offers BPO solutions in the entertainment, retail, telecom, healthcare, banking and financial services sectors and also provides technical support to gaming companies. Importantly, SSTL along with 50:50 joint venture with Spice group bagged a 10-year contract to set up, operate and maintain Interactive Voice Response System (IVRS) and Regional Call Centres (RCC) for the Indian Railways. In alliance with BSNL as the telecom service provider company obtained the license to operate the various passenger & tourism information services on behalf of Indian Railways. Accordingly, the Integrated Train Enquiry System (ITES) in north, east, west and south zones is serviced by SSTL only
III. IT Services
SSTL offers specialized IT solutions for an extensive range of embedded systems comprising device drivers, OS porting on newly designed chips and mobile programming. Besides offering e-governance, ERP product etc SSTL is among the early few to provide mobile application solutions like bill payments thru mobile etc. Infact company is looking to get patent for its M-Money product thru which one can make payment or literally transfer money thru his cellphone. Moreover it is one of the pioneering companies in India in the field of GPS/GIS which is actually a satellite-based locating and navigating utility that determines a user's precise latitude, longitude and altitude by tracking signals from satellites.
IV. Radio-frequency identification (RFID)
In 2006, SSTL ventured into RFID space by acquiring 51% stake in Skandsoft Technologies - a pioneering software solutions company which is dedicated to revolutionize the upcoming world of automated business processes through technologies like Radio Frequency Identification (RFID) & Automatic Identification and Data Capture systems (AIDC). This company has a patented platform (middleware), SETU™, which allows organizations to make the optimal usage of RFID technology.
On the infrastructure front, apart from 8 regional offices in India, SSTL has over 60 service and support facilities across the country. Internationally, it is present in the US, UK, Singapore and UAE. Besides, company has formed a joint venture “Spanco-GKS” with Golden Key Solutions of Oman to replicate its Indian business in the gulf region as well. It also has some technical tie-up with Great Wheel Corporation, Singapore. Further company is looking to acquire RFID service entity having presence in international market. Under BPO segment, company is once again focusing largely on domestic market and intends to become one of the largest domestic BPOs with about 25,000 employees and 15,000 seats in the next 2~3 years. Recently, SSTL has decided to transfer all its BPO related businesses including Respondez (international BPO), domestic call center operations and the IRCTC project (a 50:50 JV with spice telecom group) into a separate subsidiary. This step may be a precursor to unlock value by hiving-off or de-merging its BPO business into separate listed company in future. Financially company is doing quite well and considering its strong order book position it may end FY08 with sales of Rs 625 cr and profit of Rs around Rs 48 cr on a standalone basis. This translates into EPS of Rs 23 on current equity of Rs 20.65 cr whereas on diluted equity of Rs 23.50 cr (post conversion of 28.50 lac warrants) EPS works out Rs 20. Therefore investors are strongly recommended to buy at current levels with a price target of Rs 280 (i.e. 40% returns) in a years time.
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