Sunday, May 16, 2010

SPICE MOBILES LTD-RESULT UPDATE

I have recommended a strong BUY on Spice mobile on 28th February ,when it was trading at Rs.40/-.It closed at Rs.72.80/- on Friday ,which means almost 80% return in 2.5 months .Saturday company declared excellent results .For the full year ended March 2010 company posted a net profit of Rs 70Cr as against just 1 Cr(For 15 months) posted in same period last year. Full year EPS is Rs.9.45 .Even at current level ,I really feels that the real story will unfold only after the proposed merger  ,which will be completed in the near future.So i recommend a HOLD even at current price.

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Old Report is reproducing below:
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SPICE MOBILES LTD. – A COMPELLING BUY

Spice Mobiles is a BK Modi group company which makes ‘SPICE’ brand mobile handsets. Recent budget proposals and latest happenings in the company makes it a must buy for everyone’s portfolio. Finance minister’s proposal to reduce tax on imported components for making handsets is very helpful for a company like Spice Mobile. In another development company decided to merge the unlisted Spice Televenture (STV) with itself .Spice Televenture having interest in communications,technology and entertainment through its various arms. Now they decided to merge STV into
this company and make it a fully integrated player .
Spice digital is one of such arm
which is the second largest mobile Value Added Services provider in the country, reaching almost 500 million mobile subscribers. It has deployments across all the carriers and as of December 2009 had an active subscriber base of over 31 million mobile subscribers using its services. In the first 9 months of this current financial year Spice Digital has revenues close to 135 Crore with an EBITDA margin of around 30%. With the introduction of 4G technology internet services through mobile phones are expected to grow many fold.

The second company under Spice Televenture is Spice Retail. Spice Retail is the first national chain in the telecom retail business, retailing multi-brand mobiles, accessories, connections,content, and music and after sales service. With over 700 stores across 139 cities it is the second largest player in the organized mobile retail market. In the 9 months of the current financial year Spice Retail had revenues close to Rs. 500 Crore with an
average store base of 550 stores. In the last quarter ending December 2009 the business turned EBITDA positive at the store level and the company expect the operations to achieve EBITDA breakeven in 2011.
The third company under Spice Televenture is Spice Labs which is a technology incubator operating in the rapidly growing area of mobile internet and applications. It is one of the leading innovators in the mobile internet space, spanning technology platforms, application stores and enterprise applications

All these four verticals makes Spice Televenture as an integrated player in telecom sector . On merger company name will be changed to Spice Mobility. Since Spice Televenture is already the holding company of Spice Mobile equity expansion is very low due to this merger ,which is really notable. In the financial front company already posted an EPS of Rs.6.36 v/s a loss in last year same period.Company’s future plans and already improved financials makes it a compelling buy at Rs.40/-

1 comment :

  1. KOPRAN bse code 524280@42/= is a great turnaround story of 2010.Exactly the same happend with LUPIN when it was quoting at 62/= way back in 2002 and looking at the low price I bought the stock in huge quantity.Lupin is now trades at 1900+ ex 1:1 bonus.I feel same thing is happening here with KOPRAN and looks super multibagger from hereon.In fact,it is another LUPIN in making.Good opportunity to grab such stocks and held on for super duper profits.Cheers.

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