Financial Daily from THE HINDU group of publications
Friday, Feb 27, 2004
Financial Daily from THE HINDU group of publications Friday, Feb 27, 2004 |
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Markets
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Stock Markets Info-Tech - Stocks VSNL moves up on positive developments Deeptha Rajkumar
THE stock of telecom service provider Videsh Sanchar Nigam Ltd (VSNL) continued its upbeat tempo to end the day on a positive note in an otherwise volatile market on Thursday. Brokers maintain that a series of positive initiatives, some of which were formally announced by the company, have infused an element of optimism at this counter. The stock which was ruling at around Rs 167 levels on January 27, remained rangebound for some time but has since than appreciated by almost 10 per cent to its current levels. "This week it started off with the VSNL ADR gaining on NYSE, but thereafter rumours of some major corporate development being in the offing have kept the tempo going. There is also a perception that the company's business model is finally falling into place,'' a broker said. "Events suggest that there is some positive development happening in the company. While it may not be revenue accretive in the immediate term, in the long term it augurs well for the company,'' says analyst, Mr Amol Dhariya of Karvy Stock Broking. Analysts speculate that the recent tie up announced with Asia Netcom enhancing submarine connectivity to the US and Asia-Pacific coupled with the proposed acquisition of DishnetDSL is responsible for the feel good factor surrounding the counter. "Now there is talk of a broadband capacity swap between GAIL Tel and VSNL,'' an analyst added. Concerns over VSNL's ILD contract with BSNL coming to and end by March 2004 also appear to becoming assuaged. "The captive subscriber base, which the company may lose if the BSNL contract comes to an end, may be compensated to some extent by the fact Tata Group is fast expanding its own subscribe base via its own telecom network,'' says analyst Mr Rajesh Malani of P-Sec. Yet all the initiatives, analysts agree, would yield results only over the long term. "There is no denying that the value added component will increase thereby boosting the bottomline but it will be in the long term,'' an analyst said. The stock ended the day at Rs 178.90, up 3.02, with around 4.7 lakh shares traded on the NSE. On the BSE the stock closed at Rs 179.45, up 3.49 per cent, with around 2.25 lakh shares traded.
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