This Tata Group co stock surged 53% in 3 weeks; zoomed 108% from June low

Nelco shares hit a multi-year high of Rs 1,350, as they rallied 6 per cent on the BSE in Monday's intra-day trade in an otherwise subdued market

Shares of Nelco hit a multi-year high of Rs 1,350, as they rallied 6 per cent on the BSE in Monday’s intra-day trade in an otherwise subdued market. In three weeks, the stock of the Tata Group company has surged 53 per cent. The market price of this smallcap company has been more than doubled or zoomed 108 per cent from its June month low of Rs 647.65. In comparison, the BSE Sensex was trading down 0.17 per cent at 81,568 at 12:45 PM. The stock had hit a record high of Rs 1,700 in March 1992.

 

In an exchange filing, Nelco said, "The movement in the price/volume of the securities of the company is purely due to market conditions and absolutely market driven and the Management of the company is in no way connected with any such movement in price/volume."

 

 

“We would like to inform that the Company has not withheld any material information/event that have a bearing on the operation/performance of the Company which include all price sensitive information, etc. required to be disclosed pursuant to SEBI Regulation,” Nelco said on December 3, on clarification sought by the stock exchanges on its price movement.

 

Nelco is a subsidiary of The Tata Power Company, which holds 50.04 per cent stake in the company. Nelco Network Products Limited (NNPL), a subsidiary of Nelco, is engaged in providing end-to-end networking solutions (Satcom Projects) services, sale/rental of VSATs and maintenance of private hubs and hybrid networks for its customers from government to corporates (Equipment business and related services).

 

Nelco provides B2B VSAT services in banking, oil and gas exploration, renewable energy, telemedicine, mining and construction and rural education. It enjoys a strong market share especially in the oil and gas and banking (ATM) segments. The air and maritime mobility space is expected to substantially expand the industry size in the medium-term along with other upcoming streams such as cellular backhaul. With its partnerships with technology vendors such as Panasonic Avionics Corporation and Intelsat, Nelco is well positioned to benefit from growth in mobility.

 

CRISIL Ratings expects Nelco to witness improved and healthy revenue growth in FY25, especially with expectation of significant growth in revenue and profitability in the second half of the fiscal 2025 as against the first half of current fiscal. 

 

Furthermore, the company is expected to maintain a healthy annual growth rate of more than 15 per cent in revenue to support its leading market position and healthy operating profitability over the medium term on a sustained basis. This will be supported by the recurring nature of its business, an expected increase in bandwidth revenue and increasing use of VSAT technology. 

 

With de-regularisation in the space sector and pacing up implementation of the New Space Policy 2023, new streams of VSAT usage will be coming up, which shall further support growth in revenue. Further, with evolution in technology, bandwidth fees are also expected to reduce, which is likely to result in making VSAT technology more competitive and could support increasing the consumer base, the rating agency noted in rationale.

 

Meanwhile, the outlook for the Indian Satcom industry is highly optimistic with significant growth potential. This has been enabled by the strong backing from the government for the development of the sector, technology advancements and opening of regulatory landscape, among other factors, Nelco said in its FY24 annual report.

 

The company believes that the growth of Satcom deployment will be strong in mature existing segments such as BFSI, Aero IFC and Maritime. Nelco aims to sustain its leadership position in these segments and build on its market share. The outlook is also positive for many of the newer emerging segments. The domestic aviation sector in India is expected to adopt IFC services in the next two years. The company plans to leverage Satcom potential for scaling up in these verticals.

 

The LEO services are expected to be operational in the country in FY25, which has the potential to significantly expand the market and open newer verticals for Satcom services. The company also offers turnkey solutions for satellite communication involving setting up of dedicated and private networks for large organisations, particularly in the government and PSU sector. The company has vast experience in building and running operations and maintenance of large communication networks involving multiple Satcom technologies, Nelco said.