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Sunday, June 1, 2008

Aishwarya Telecom:-Dont deserve a price of 136rs

Scripscan:Aishwarya Telecom
Code:511533
CMP:100


[Aishwarya Telecom news,views and analysis/why to avoid/valuations expensive/works in little margin/target price/stay away and avoid/Single client dependency/Future prospects/much better bets available]


Aishwarya Telecom recently tapped the market and went on to high a of 136rs within few days of its listing.Its presently quoting at 100 rs,so is it worth an investment at present level?Read on.

Aishwarya Telecom is a ISO 9001:2000 Certified company manufacturing Mobile and Broadband Tester.

1)Basically the company has more of trading business.It imports the products from overseas players and the sells the same to its clients.The company has been in the sector for over a decade now but hasnt found the road easy to grow despite the massive demand for the sector.

2)The company gets majority of its revenue from the psu giant BSNL.Though it has been able to offer its product to other non psu companies but these are in very nascent stage.Aishwarya is relatively a small player with revenues of 30crs expected in the present fiscal 08.The company faces stiff competition from market leaders like Agilent Technologies,Rohde & Schwarz etc.It would be prudent to note that these companies have got a long decent relationship with most of the operators,so aishwarya with its small scale would find it tough to come superior to these companies and bag major orders.Also if those companies comes in india to to do business aishwarya may just find it too tough to survive.Looking at the sectorial boom and low cost nature of our country that remains a huge possibility.

3)At present prices of 100 odd its quoting at a PE multiple of 24 its expected 08 earnings.It can be compared with listed player like aplab which trades at a multiple of just 8.Further aplab is a 120crs turnover company with long existence.There are many more players available at a PE multiple of about 6-8 which are the manufacturer and having better pedigrees.Still those companies are struggling to attract better valuations.

4)Its of anyone"s guess that some operators build positions in the company, result being the high of 136rs after listing.Present huge volumes and flip in the price suggest that they are in a hurry to exit the counter.So if you have a position in the scrip better exit or else chances remains another junk stock may spoil your portfolio for a long period of time.



Regards,
ARUN
I can be reached at:-arunanalyst@rediffmail.com

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