ELNET TECH- A POTENTIAL MULTIBAGGER

ABOUT:-

            ELNET TECH provides Infra-structure services to Software and BPO Companies and developing & managing SOFTWARE TECHNOLOGY PARK.

ELNET TECH’s core competence is to develop and manage Software Technology Park. ETL has pioneered the concept of Software Technology Park in India…

BRIEF ABOUT COMPANY:-

Elnet Technologies (ETL) was incorporated in August 1990 as a Public Limited Company promoted by Electronics Corporation of Tamil Nadu and Stur Technologies Pvt Ltd (formerly New Era Technologies Private Limited) & its Associates. ETL’s core competence is to develop and manage Software Technology Park. ETL has pioneered the concept of Software Technology Park in India.

ETL is a Profit making and Dividend paying Company. ELNET was awarded the ISO 9001-2000 certification on 24.01.07.

Elnet Software City is located in a 3.16 acres plot in Taramani adjacent to TIDEL PARK along the IT corridor.The complex has a super built up area of 2,00,000 sq.ft and lettable area of 1,70,000 sq.ft

At present, the occupancy level is 100% and the complex houses clients engaged in software development and data processing etc and an organization promoted by the Government of Tamil Nadu furthering the knowledge of Tamil, namely, Tamil Virtual University.

The company has 100% diesel generator back up, 900 TR split packaged air conditioning system, 12 x 120 KVA uninterrupted power supply systems in parallel redundant mode as part of additional  infrastructure facility  for use by the companies.

SHAREHOLDING PATTERN:-

             Promoters as on Dec’16 are holding 52.85% of the company’s shares. The company is having no pledged shares! The main promoter, ELECTRONICS CORPOATION OF TAMILNADU LTD.  holds 26% of the company’s shares. Highest holder among the public shareholders is the HUF, holding 1.64% of the company’s shares.  DIIs holding stand at 0.02% (2DII holders)as of sept16.

Financials and future prospects:-

FINANCIALS:-

             The company this financial year posted an EPS of 16.12 vs 14.07 in FY 2014-15, thus posting highest EPS ever! The company is having a good financial trend reporting fab Q2, 12.5 rise in EPS YoY and more than 30% rise QoQ.

             Company’s operating profit per share is Rs29.75 against 28.91. The OPM, CPM & NPM stands at 53.88%, 43.94%, 29.18% against 53.84%, 44.82% and 26.2%!!! Even the ROCE increased to 17.1% against 16.41% while RONW touched 12.16% vs 11.68%!!!

Company is virtually debt-free. Stock is currently trading at 0.8 times its book value. Company has been maintaining a healthy dividend payout.

FUTURE PROSPECTS AND EXPECTATIONS:-

The company has plan for an expansion and creating necessary infrastructure for BPO operations, thus contributing to the growth of exports.The systems and procedures developed over the years provide integrated, effective and efficient management of the facility.

Clientele:-

1.     AGS Health India Pvt. Ltd

2.     AXISCADES Engineering Technologies Limited

3.     Coastal Training Technologies - India Pvt. Ltd

4.     Pearson India Education Service Private Limited

5.     Quest Global Engineering Pvt. Ltd.,

6.     Fifth Generation Technologies India (P) Ltd.

7.     Island Pacific Retail Systems Pvt. Ltd

8.     Information Dynamics India Pvt Ltd

9.     Inlogic Technologies Pvt Ltd

10.                                                                            Logitech Engineering & Designs India Pvt Ltd etc

SWEET SPOTS:-

1)    Company has been maintaining a healthy dividend payout.

2)    The company’s operating cash flow is positive all the time, thus maintaining its stability and the ability to pay interest on its low debt and also having huge cash reserves for further expansion.

3)    Increasing cash reserves on low equity; can issue bonus anytime.

4)    Company has plans for future expansion.

5)    No doubt in promoters’ integrity.

6)    Modi Govt. Has vast Interest in Skilled Development and More focus on education. This company has already many projects from Govt. on education.

7)    To reap benefits of Dig India (digitalization) this year.

8)    Venture into timely cash generating projects like renewable energy sector, consumption based projects and projects related to digital India and skill India.

Hot spots:-

1)    The company has a poor growth record, less than 7% over past five years.

2)    Company is already operating at 100% capacity thus leaving no scope for growth in the financials unless the company expands.

3)    Company has low ROE.

4)    Company’s contingent liability stands at 17crores.

RETURNS:-

               The company is expected to do well in coming years, the company can give 40-60% CAGR return over next 3-4 years from recommended price 95.

UPDATE 25th July, 2018 (CMP120):-

After a rally of more than 2x from recommended price 95, it's now hovering in 120ish levels, The company is still fundamentally sound! Hold is the call

Disc:- All the info are based on the writer's own research/gathered from public domains. The writer of this Blog is neither any advisor nor related to any brokerage houses!! The writer might be himself invested in the stock after his own research so the views might be biased. One must do their own research before investing. The writer of this blog won't be held responsible for any of your profit/loss in your investment/trading career!