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May 21, 2001
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Money > Stocks > Market Impact > Report May 21, 2001 |
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VSNL: Status quo and waiting to goNetScribes / Mahesh ShettyAnalysts and scrip watchers tracking the country's premier Internet and telephony player Videsh Sanchar Nigam Limited (VSNL) remain unchanged on the scrip after the company's analyst meet last week. Their immediate concerns center around the impending opening up of VSNL's high growth Internet telephony business. Analysts expect this move to bring increased pressure on the company's short to medium term profitability as well as market share. "The pros and cons of this scrip are pretty much out on the table - we're all waiting for the sell-off now, so there's no change in sentiment after the recent meet," said an analyst at a leading brokerage in Bombay. "Both its basic and cellular operations are not going to take off soon, plus its biggest market is about to be opened up, so bottomline growth is under pressure," he added. The immediate trigger is the government's decision to divest a 25 per cent stake. This is currently the largest driver of positive sentiment despite the fact that the time window for its implementation is fairly undefined. The only other positive boost in the recent past has been the company's decision to declare a dividend in the range of Rs 100 per share. The largest beneficiary of this move will be the government itself but the market still attaches value to the news. "The inclusion of the scrip in the MSCI Index and the privatisation decision are the two big movers of sentiment," said an analyst at a leading foreign brokerage in Bombay. The company's relatively high degree of transparency and perception of being market savvy are the other factors. "Compared to both BSNL and MTNL, VSNL is still the best bet. The scrip in going to be range bound between Rs 300-400 and till we see some fresh news on the sell-off, it's going to stay there," said an analyst at a large foreign bank in Bombay. VSNL recently beat analyst estimates to announce an 88 per cent rise in profits for the year ended March 31, 2001 and a 43 per cent rise in profit for the January-March quarter. For its quarter ended March 31, 2001, the company posted a net profit of Rs 4.47 billion over Rs 3.12 billion in the same quarter last year.
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