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Kavveri Telecom

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3032
Printed Date: 20/Apr/2025 at 8:20am


Topic: Kavveri Telecom
Posted By: srisaurabh2000
Subject: Kavveri Telecom
Date Posted: 12/Oct/2010 at 12:48pm

Kavveri telecom ( http://www.kavveritelecominfra.com - http://www.kavveritelecominfra.com ) is largest manufacturer of Antennas & RF products in India. Their clientele includes Airtel, Alcatel-Lucent, AAI, BSNL, Idea, ISRO, Motorola, Nokia, Rcom, Tata tele, Vodafone.

CMP 136
PE 4.5 (on consolidated will be around 5.5 or so)
Mcap 135
EV/EBITDA 3.05
Promoter holding 14.6%
P/BV 1.78

ROCE(FY06-FY10)
9.99  17.53  21.81  26.07  26.17
ROE(FY06-FY10)
11.35  21.06  31.71  24.18  40.93

Sales(FY06-FY10)
36.78  53.65  160.32  202.74  210.51

Net Profit(FY06-FY10)
2.65  5.91  11.65  11.34  31.15

EPS (FY06-FY10)
2.69  6.01  11.86  11.55  30.96

The topline and bottomline has been consistently growing. The future growth drivers can be:
1.) Kavveri Telecom infrastructure to provide neutral host provider to multiple hosts.
2.) Growing mobile subscribers and growing cell sites would be increasing demand. Wi-max also would drive the new growth.
3.) Company has been looking for acquisition in North America. Comapny would be looking to increase the promoter stake with this. This might be 40% but the data point is not verifiable.

Similar to other maufacturing fields, a major challenge for this sector is cheap imports from China. There is no import duty on telecom products. Kavveri has so far managed to do well to hold on.

A comparable peer would be Shyam Telecom which also has partnered with Sistema from Russia for MTS broadband. Currently at PE~5.5 this looks cheap.

Anand Rathi also has a report on this one.
 


Replies:
Posted By: master
Date Posted: 13/Oct/2010 at 11:14pm
Originally posted by srisaurabh2000

A comparable peer would be Shyam Telecom which also has partnered with Sistema from Russia for MTS broadband. Currently at PE~5.5 this looks cheap.
 
I think Shyam Tele incurred losses even at PBDT level in FY10 mainly due to extra-ordinaries, business promotion expenses, write-offs etc.
 
In your opinion, what gives an edge to Kavveri over its competitors, both in terms of cost and business advantage?


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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: srisaurabh2000
Date Posted: 15/Oct/2010 at 12:24pm

The business advantage for such a company in my opinion would come from products which the company has been doing and the R&D capabilities. Their plant at Bangalore has capacity of mass manufacturing by producing 1,00,000 antennas and 10000 RF products.
They are only Indian OEM to export antennas and RF products to North America.
They hold 26 patents.
They have strategic tieup with Orban Microwave of Belgium.

From what I've seen of Shyam I'm not aware of their R&D and manufacturing capabilities. Also have not looked at their tie-up with Sistema except that they hold 23% of the stake. While they are marketing heavily I'm not sure of the sales of MTS.

Kavveri comparatively looks a focussed player with better capabilities and clients ranging in telecom, aviation and defence.

BTW just came across this where the MD mentions one of their targeted acquisition at advanced stage:
http://www.bloomberg.com/news/2010-10-08/ericsson-s-indian-supplier-kavveri-to-buy-two-companies-in-europe-u-s-.html - http://www.bloomberg.com/news/2010-10-08/ericsson-s-indian-supplier-kavveri-to-buy-two-companies-in-europe-u-s-.html


Posted By: master
Date Posted: 15/Oct/2010 at 1:26pm
@srisaurabh, I like your optimism in the stock.
 
My few points on Kavveri Tele:
1. R&D experience of 500 manyears sounds good to hear-  don't know how much difference it will eventually make to the fortunes of this company, say 3 years from now, in a fast changing obsolescence prone sector.
2. Management seem to be going a little too fast with acquisitions. I hope they integrate the operations well.
3. Consolidation of underperforming entities overseas can be a challenge, as we have seen in so many other companies. If they get their act together, it can be a good story.
4. From management speak, acquisitions will be primarily funded through convertible warrants and preferential issue. I suppose preferential shares referred are 40 lakh to promoters subscribed a few months ago.
5. From their previous announcement, Convertible warrants planned are 30 lakh in number, convertible into shares to promoters & strategics. What we need to know if that is all, or they have some more warrants planned or any other form of fund raising.
 
Disclosure: I have a vested interest in the stock.
 


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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: master
Date Posted: 03/Nov/2010 at 9:39pm
Would like to see consolidated results for H1.
 
@srisaurabh, any idea on consolidated numbers. Standalone don't help here since it is the subsidiaries that need to be tracked for coming out of red.


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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: srisaurabh2000
Date Posted: 04/Nov/2010 at 12:15pm
Originally posted by master

Would like to see consolidated results for H1.
 
@srisaurabh, any idea on consolidated numbers. Standalone don't help here since it is the subsidiaries that need to be tracked for coming out of red.
 
No, I also have not seen the consolidated numbers anywhere - this seems bad.

Posted By: kushal.masand
Date Posted: 19/Jan/2011 at 12:21pm
it is moving pretty nicely.....
any update.....
is anythng hanky-panky going on...????

Posted By: KetanAdmirer
Date Posted: 19/Jan/2011 at 8:54am
Promoters are serial diluters of equity..

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Cheers
Anand

Posted By: master
Date Posted: 11/May/2011 at 9:55pm

Company is reported to have forayed into 4G technology by launching a linearly polarised CPE antenna for the requirement of cellular operators in North America. Supposed to be an in-house R&D product. Wonder what's the market potential though.



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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: Blee007
Date Posted: 14/May/2011 at 11:15pm
Bharat Sanchar Nigam Limited (BSNL) is recruiting 3945 Junior Telecom Officers (JTO) through Competitive Exam to be conducted in various centres on 21st June 2009 (Sunday).
* JTO (Telecom) : SC-459. ST-239, OBC-989, General-1858 Total - 3545 Vacancies
* JTO (Civil) : SC-23, ST-16, OBC-69, General-92 Total - 200 Vacancies
* JTO ( Electrical): SC-15, ST-30, OBC-55, General-100 Total - 200 Vacancies
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