Stock Analysis: Suyog Telematics

Hi All

My next stock which i have found extremely exciting in the current market scenario and the growth the company has shown is Suyog Telematics

Current Price as of 21-01-2019	207.6
Market Capitalization (Cr)	217.3

The Company is a passive telecom infrastructure provider, engaged primarily in the business of Installing and commissioning of poles, towers and optical fibre cable systems since 1995. 

It is registered as Infrastructure Provider Category-I (IP-I) with Department of Telecommunications (DoT).  The company has a strong presence in the government sector in Mumbai supported by the fact that it has sole licensee to install towers and poles for Mumbai Metropolitan Region Development Authority (MMRDA) and Mumbai State Road Development Corporation Ltd (MSRDC) sites across Mumbai region such as flyovers, sea link and skyways. The exclusive licence from government agencies ensure stable revenue growth and profitability.


STL also has signed master service agreement with all the major telecom operators and caters to companies such as Reliance Jio Infocomm Ltd , Vodafone India Ltd , Bharati Airtel Ltd and various other service providers for installing the signal towers and poles. 

Recently on 17th Jan 019, it has successfully able to obtain License from Mumbai Metropolitan Region Development Authority (MMRDA),for installation of cellular equipment across all 17 Monorail stations of Mumbai which in my view is a big news for this company and the potential it might have.

https://www.bseindia.com/xml-data/corpfiling/AttachHis/2c9f373f-e8e5-4ba3-85df-51646298276d.pdf

Shareholding

- 49.63% promoter holding ( 39.29% of Promoter holding is Pledged)

- 50.37% Non Institutional holding

Raw Material : Fibre & Metal Products, Cables, Pipes and Other Items

Products

1. Tower Business : The are in the business of installing Mobile Towers and providing the same to telecom service providers on a sharing basis. They have a tenancy ratio of 1.8 per tower. These telecommunication towers are being used for all technologies like CDMA, 2G, 3G, and 4G. Their Towers are normally in range of 6 meters to 30 meters in height and are considered structurally stable assuming a wind speed of 180 km per hour. 

2. Poles Business :Since it is not possible to erect regular network towers etc atop flyovers/bridges they have spearheaded the concept of Poles for telecom infrastructure. They have deployed a huge number of Poles and Infrastructure on lease over several MSRDC Flyovers, Bandra - Worli Sea Link Project, MMRDA Flyovers as well as Skywalks in and around Mumbai and have also installed BTS equipments on poles for the telecom service providers. They have covered all the 3 Main Routes of Mumbai (Sion Panvel Highway, Eastern Express Highway & Western Express Highway) along with critical South Mumbai Area through our innovative pole concept solution. They have recently started working in NHAI projects & are installing similar flyover sites in Bangalore. Further, they have also worked on the concept of installing BTS on Poles in local areas where there is severe traffic and congestion in collaboration with the local Police Authorities, whereby they install poles in places such as Check Naka’s, Near Railway Stations, Near Market Areas, Slum Areas etc and also install CCTV Cameras for the Police Department in such Poles in order to help them with their surveillance mechanisms. Clients using their poles infrastructure include Airtel, Reliance Jio, Vodafone & Idea Cellular. 

3. Optical Fiber Network Business: they have set up our own optical fiber cable network of about 200 km from Thane Ghodbunder Road to Kalamboli & on all flyovers, skywalk & FOB Sites in Mumbai Metropolitan Region. In addition, their OFC network, fiber has been laid in ducts intended to provide added protection and to allow us to lay more fiber as demand increases. We have provisioned extra ducts throughout our OFC network, with the majority of our OFC network having been laid with eight ducts. The average age of our ducts is thirty years, and the expected life span of such ducts is approximately thirty years. Our OFC network is laid about 2 ft below the ground for protection against natural elements and human intervention. They have also started laying our Fiber Optic Network in Bangalore Circle.

Valuation Parameter:

1. P/E : 9 vs Industry Peer ~21 (eg: Bharti Infra)
2. Sales growth in Last 5yr 57%
3. EBIT growth in last 5yr 60%

While Price has fallen has fallen around 50% of the company, earnings have increased by 20% during this time and at this moment P/E looks extremely attractive.

Growth Plans The Company is growth oriented in its approach and has made certain decisions for expansion of its operations:

• The company has extended its operations into NHAI projects.
• They are expanding our presence in Bangalore Circle with plan of rolling out 1000+ flyover pole sites
• They are also planning to expand our presence in Gujarat Circle in current FY
• The company is focused to increase the slum site tenancies from existing 1.8 to 2.
• The company is planning to provide fiber connectivity to all Reliance Jio & other incumbent operator sites in Mumbai & Bangalore – mainly flyovers, skywalks, and FOB sites. This initiative will ensure strong presence of the company is fibre business.
• They would also be capitalizing on their expertise in rolling out Small Cell Sites which is the next wave of deployment growth.

Profit & Loss
Report Date	Mar-15	Mar-16	Mar-17	Mar-18
Sales	21.71	43.75	60.54	84.61
Operating Expense	13.14	20.17	31.73	51
Raw Material Cost	0.82	16.89	26.58	38.87
Change in Inventory	0	0	0	0
Power and Fuel	0.02	0.01	0.02	0.04
Other Mfr. Exp	0	0.01	0.07	0.11
Employee Cost	1.14	2	2.59	4.3
Selling and admin	0.83	0.81	2.39	2.49
Other Expenses	10.33	0.45	0.08	5.19
Operating Profit	8.57	23.58	28.81	33.61
Operating Margin (%)	39.5%	53.9%	47.6%	39.7%
Other Income	0.01	0.11	3.06	2.38
Depreciation	1.5	2.73	3.16	4.42
Interest	1.69	2.69	5.09	7.64
Profit before tax	5.39	18.27	23.61	23.92
Net profit	3.37	12.06	16.95	18.48
Quarters
Report Date	Dec-17	Mar-18	Jun-18	Sep-18
Sales	22.63	22.39	24.2	26.52
Expenses	11.5	18.72	12.46	12.06
Operating Profit	11.13	3.67	11.74	14.46
Operating Margin (%)	49.2%	16.4%	48.5%	54.5%
Other Income	0.6	0.97	0.48	0.51
Depreciation	1.11	1.21	1.42	1.43
Interest	1.87	1.86	1.67	2.21
Profit before tax	8.75	1.57	9.13	11.33
Net profit	6.18	2.8	7.02	7.59
BALANCE SHEET
Report Date	Mar-15	Mar-16	Mar-17	Mar-18
Equity Share Capital	8.46	8.46	10.15	10.15
Reserves	14.53	26.59	41.5	59.52
Borrowings	12.62	27.35	60.59	61.05
Other Liabilities	7.89	21.61	25.85	29.18
Total	43.5	84.01	138.09	159.9
Net Block	20.25	39.36	67.64	86.42
Capital Work in Progress	2.29	4.33	5.5	4.73
Investments	1.08	1.08	1.08	1.08
Other Assets	19.88	39.24	63.87	67.67
Receivables	2.69	10.98	12.98	11.77
Inventory	0.79	0.41	1.08	1.54
Cash & Bank	0.23	4.28	1.45	1.88
others	16.17	23.57	48.36	52.48
Total	43.5	84.01	138.09	159.9
CASH FLOW:
Report Date	Mar-15	Mar-16	Mar-17	Mar-18
Cash from Operating Activity	3.88	1.84	-0.79	32.73
Cash from Investing Activity	-10.55	-10.55	-26.56	-21.03
Cash from Financing Activity	6.58	12.75	27.76	-12.01

With all these factors this company can certainly be an interesting company to watchout for :) Please note that i am not a SEBI registered analyst and my views are purely educational. I have investment in this company so my views might be biased

Regards

Microcapblaster